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While much is uncertain, some things remain clear for our industry. Chief among them, the growing frequency and magnitude of natural disasters and climate-related risks to agricultural supply chains make the need for greater agricultural resilience an investment imperative for all businesses, from farmers to multinational corporations. How we respond to risks is a matter of both policy and corporate action.
Now let’s take a closer look at how policy and our industry may evolve over the next four years, with an eye on how to support resilience in a changing landscape.
U.S. National Policy
The US agriculture industry faces several areas of uncertainty under the new administration, such as conservation program funding, impact of tariffs on export markets, impact of immigration policies on labor availability for agriculture, and timeliness of financial support for farmers. Here are the domestic policies and potential changes that we’re watching closely in the months ahead.
Farm Bill
With passage of a new Farm Bill this year uncertain, the industry is left waiting for the ratification of several provisions that are key drivers and "safety nets" for U.S. agriculture. The last Farm Bill that passed in 2018 expired at the end of 2023, but was extended for another year. Senate agriculture chair Debbie Stabenow recently introduced a five-year extension of the Farm Bill that would preserve climate funding, but its passage is unlikely in the lame duck session.
The new administration’s approach to the Farm Bill could bring significant changes, particularly to key programs like conservation funding. Changes to funding for programs like the Regional Conservation partnership Program (RCPP) and the Environmental Quality Incentives Program (EQIP) remain uncertain, but any cuts could weaken farmers’ ability to manage risks, especially amid economic and climate pressures.
While limited policy details were provided during the campaign, we expect agricultural funding could prioritize farmer price subsidies over conservation programs.
Inflation Reduction Act (IRA)
Reductions to Inflation Reduction Act (IRA) funds for conservation, which could be a target in a budget reconciliation process, would limit future availability of resources for sustainable farming initiatives. However, despite proposed changes, the Climate-Smart Commodities grants that have been allocated will remain. These grants have already connected more than 14,000 farms to climate-smart markets, premiums, and incentives. Future IRA conservation funding may be at risk in the next congress as the new administration balances its funding priorities.
Biofuels
The Clean Fuels Production Tax Credit (45Z), set to replace several existing biofuel credits in 2025, has far-reaching implications for the industry. Over the last several months, many stakeholders have logged concerns with Congress including the delay in implementing 45Z regulations, uncertainties around emissions-based credits, and challenges related to international feedstock standards. These issues create uncertainty for biodiesel producers and broader market participants, especially given the credit's short three-year timeline.
However, with the election of John Thune as Senate Majority Leader, the biofuels industry could see advocacy for supportive policies. Thune’s history of backing biofuels could lead to efforts to address stakeholder concerns and extend or adapt the 45Z credit to provide long-term stability. Additionally, the administration’s general support for domestic energy production may align with biofuels’ role in reducing emissions, particularly through innovations like sustainable aviation fuel (SAF). Still, questions remain about how domestic and international policies will balance market needs, sustainability, and rural economic benefits.
U.S. Immigration Policy
Income challenges remain high for producers. The USDA indicates total production expenses were forecast to increase by 3.8% in 2024, with labor being one of the biggest increases. With proposed immigration policies putting the risk on immigrant labor access for agricultural businesses, the industry will no doubt will need to continue to make the case for and find practical ways to maintain access to this vital labor force.
The dairy sector and meatpacking and poultry processing facilities are particularly vulnerable, with studies indicating that up to 80% of dairy workers are immigrants. A study from the National Milk Producers Foundation found that a loss of this workforce in the dairy industry could lead to a potential doubling of retail milk prices and an estimated $32 billion hit to the U.S. economy if these workers are removed from the labor pool.
Trade Policy and Farm Impact
Tariffs proposed by the incoming administration are concerning the agriculture industry. During the last Trump administration, the American Farm Bureau Federation warned that any effort to impose tariffs on Chinese imports runs the risk of retaliatory measures against the nearly $20 billion in agricultural products U.S. farmers and ranchers exported to China.
This situation underscores a key vulnerability for U.S. agriculture: its reliance on export markets like China. Retaliatory tariffs could limit market access for key commodities, increasing domestic supply and lowering prices, which would strain farmers already facing narrow margins and rising costs.
The Trump administration may provide subsidies to farmers to compensate for lower prices. However, these subsidies could likely come at the expense of funding for conservation programs, leaving farmers more reliant on market price inventions while simultaneously more exposed to the negative impacts of extreme weather due reduced incentives to employ resilient practices.
Global and Local Policy
While support for many U.S. conservation policies is uncertain, global policies will continue to impact the short- and long-term future of the agriculture industry as well. Here are some of the forces we believe will play an important role in shaping agriculture sustainability globally.
EU Environmental Disclosures and Reporting
The European Union's Corporate Sustainability Reporting Directive (CSRD) is driving a better understanding of climate-related risks in agricultural value chains. This directive introduces the concept of double materiality in reporting. For global companies in the food and beverage value chain and their suppliers, this means assessing not only how sustainability issues affect their financial performance but also how their activities impact the environment and society. The CSRD mandates that companies report the material risks to their physical supply chains, encompassing the entirety of the value chain. This is the data available to industry leaders via solutions like Regrow’s Sustainability Insights, which offers supply-specific insights into grower practices, land use change, and on-farm emissions.
EU regulations, with CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) being the most prominent, urge private sector companies to establish a clear, quantifiable correlation between financial performance and environmental impact. This is important for all companies, not just those reporting under the European corporate sustainability directives.
EU Trade Policy
The EU is pushing for more climate-smart imports through policies like the European Union Deforestation Regulation (EUDR) and considering border adjustment taxes, which would tax carbon-intensive imports from non-EU countries. This global trend means U.S. companies (as well as all large companies operating in EU markets) will need to maintain their investment in agriculture resilience in order to maintain access to key international markets.
The EU Commission recently delayed implementation of EUDR by one year, giving large companies until December 2025 to comply with the rules, and smaller companies until December 2026. Additional changes to the rules, including a new category of source countries dubbed “no risk,” came in response to EU member and non-member countries who relayed challenges in meeting regulatory requirements. Although further changes to EUDR could undermine EU’s commitment to sustainable sourcing approaches, we’ll watch developments closely in 2024 as companies and countries work on strategies to adhere to the regulation.
California's Climate Corporate Data Accountability Act (CCDAA)
While US federal regulations may be in flux, California is moving forward with its own climate disclosure requirements. The CCDAA, which we discussed in an article last year, will mandate scope 1 and 2 emissions reporting starting in 2026 and scope 3 reporting in 2027 for thousands of U.S. companies doing business in California.
California is the 5th largest economy in the world. The state has a significant impact on businesses that operate within its borders — many of which operate nationally and internationally, as well. These guidelines will help build the foundation for businesses to measure and report emissions, and will likely encourage progress even if federal requirements do not immediately follow suit.
Focus on Resilience Remains
Despite the uncertainty in the political climate, weather-related production risks continue to pose significant financial risks to all agricultural value chain stakeholders. In 2023, major disasters and severe weather caused over $21 billion in crop losses, highlighting the need for robust risk management strategies.
In response to the recent devastation caused by Hurricanes Helene and Milton, President Biden has proposed a substantial disaster relief package to Congress. The package includes $21 billion in aid specifically for farmers and ranchers affected by these natural disasters. This proposed funding aims to reimburse costs for crop production, crop quality, and orchard tree losses, as well as compensate livestock producers for increased supplemental feed costs due to drought or wildfires.
While such relief efforts are crucial for immediate recovery, they underscore the importance of investing in proactive risk mitigation strategies rather than solely focusing on post-disaster compensation. By implementing conservation agriculture practices and investing in resilient infrastructure, we can reduce the long-term costs associated with climate-related disasters and create a more sustainable agricultural sector.
At Regrow, we remain committed to providing practical solutions that help farmers and businesses navigate these challenges and build a more resilient agricultural system. By focusing on data-driven decision making, fostering collaboration, and investing in innovation, we support the industry in creating a more resilient and prosperous future for agriculture.
