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Hog producers: Exit first-quarter hedges... The cash hog index is showing signs a seasonal low is in place. With February futures trading near the cash index, near-term downside risk is limited. We advise hog producers to exit the 50% first-quarter hedges held in February $84.00 put options. Our exit was $2.90 for a 45-cent loss.
Impacts of mass deportations on U.S. agriculture... President Donald Trump’s promise of large-scale deportations of undocumented immigrants could have significant consequences for the U.S. agricultural industry. The ag sector relies heavily on immigrant labor, with undocumented workers making up a substantial portion of the workforce. According to estimates:
- Nearly half of all farmworkers are undocumented.
- Undocumented immigrants constitute about 41.2% of hired crop farmworkers as of 2020.
- In some states like Idaho, up to 90% of dairy workers were born outside the U.S.
Mass deportations would remove a significant portion of this labor force, potentially leading to severe worker shortages in an industry already struggling with labor issues. The loss of undocumented agricultural workers could have far-reaching economic consequences:
- The American Immigration Council estimates that the agriculture sector’s output could decrease by $30 billion to $60 billion if mass deportations occur.
- The overall U.S. economy could shrink by 4.2% to 6.8% due to mass deportations across all sectors.
The labor shortages resulting from mass deportations could affect food production and prices:
- A study by the Peterson Institute found that mass deportation could lead to a 10% increase in food prices.
- The U.S. food supply chain could face significant disruptions.
Farmers and agricultural businesses may need to adapt in several ways:
- Increased reliance on the H-2A visa program for legal temporary agricultural workers, despite its higher costs.
- Potential acceleration of mechanization and automation in farming.
- Possible shift towards less labor-intensive crops or reduced production.
The effects of mass deportations would not be uniform across the country. States with large agricultural sectors, such as California, Texas, and Florida, could be particularly hard hit. Certain agricultural subsectors, like dairy farming, which requires year-round labor, may face more severe challenges.
The long-term effects of mass deportations on U.S. agriculture could include:
- Potential increase in food imports as domestic production decreases.
- Structural changes in the agricultural labor market and farming practices.
- Possible consolidation of smaller farms into larger operations, which would be better able to absorb increased labor costs.
Note: On President Trump’s first full day back in office, Immigration and Customs Enforcement (ICE) arrested 308 illegal migrants. These arrests targeted individuals deemed threats to public safety, with Border Czar Tom Homan stating that an estimated 700,000 such individuals remain in the U.S.
Bottom line: Trump’s proposed mass deportations could significantly disrupt the U.S. ag industry, potentially leading to labor shortages, increased food prices, reduced production and long-lasting changes to the structure of American farming. The full extent of these impacts would depend on the scale and implementation of the deportation plans.
FARM Act reintroduced to safeguard American farmland... Sens. Tommy Tuberville (R-Ala.) and John Fetterman (D-Pa.) reintroduced the Foreign Adversary Risk Management (FARM) Act to address rising concerns over foreign ownership of U.S. agricultural land. The legislation proposes making the U.S. Secretary of Agriculture a permanent member of the Committee on Foreign Investments in the United States (CFIUS) to ensure agriculture is prioritized in reviews of foreign investments. Citing national security risks from adversarial nations like China, the bill aims to protect U.S. agricultural supply chains from foreign influence and designates these supply chains as critical infrastructure. The FARM Act also mandates reporting on foreign investments in agriculture and outlines measures to secure the industry against external threats. The bipartisan effort is backed by a coalition of lawmakers from both chambers.
Key ag policy veterans join Rollins’ USDA team... USDA announced several senior staff appointments on Tuesday, highlighting key ag policy experts and veterans from Capitol Hill and the Trump administration. These roles, announced ahead of USDA Secretary nominee Brooke Rollins’ Senate Ag Committee confirmation hearing on Thursday, do not require Senate confirmation. They included:
- Kailee Tkacz Buller: Chief of Staff to Rollins, formerly CEO of the National Oilseed Processors Association and a USDA alum from Trump’s first term.
- Preston Parry: Deputy Chief of Staff, previously Rollins’ assistant at the America First Policy Institute and Domestic Policy Council.
- Jennifer Tiller: Chief of Staff to Deputy Secretary nominee Stephen Vaden and Senior Adviser for Food, Nutrition, and Consumer Services, was Deputy Staff Director for the House Ag Committee.
- Ralph Linden: Principal Deputy General Counsel, a USDA veteran who served in various capacities in the Office of the General Counsel from 1982 until 2021, including serving as an Acting Deputy General Counsel during the first Trump administration.
- Audra Weeks: Deputy Director of Communications, previously a USDA Deputy Press Secretary and consultant for food and agriculture clients.
- Dominic Restuccia: White House Liaison, a former legislative director and recent Michigan state House candidate.
Cargill settles turkey price-fixing lawsuit... Cargill will pay $32.5 million into an escrow account for the benefit of the settlement class. The settlement is subject to court approval. Filed in 2019, the lawsuit accused major turkey producers of conspiring to fix, maintain and inflate turkey prices in the U.S. through the exchange of sensitive information. Cargill controls about one-fifth of the U.S. turkey market. Other named companies include Butterball, Perdue Farms and Hormel Foods. The alleged activities occurred between 2010 and 2017.
Tyson Foods settled for $4.62 million in 2021. Tyson Foods holds about 4% to 5% of the U.S. turkey market.
Cargill denies any wrongdoing and claims the settlement is to avoid litigation risks. The company has agreed to assist plaintiffs in their claims against non-settling defendants.
This case is part of a wider series of antitrust lawsuits in the meat industry, including chicken and beef price-fixing allegations.
Trump to Putin: End war in Ukraine or face new sanctions... President Donald Trump told Russian President Putin to end the war in Ukraine or face a new wave of punitive measures including tariffs, taxes and sanctions. “We can do it the easy way, or the hard way — and the easy way is always better,” Trump says in a post on Truth Social. Trump said he “loves the Russian people, and always had a very good relationship with President Putin.” He continued, “Let’s get this war, which never would have started if I were President, over with! We can do it the easy way, or the hard way — and the easy way is always better. It’s time to ‘MAKE A DEAL.’ NO MORE LIVES SHOULD BE LOST!!!”
DOE resumes LNG export license review and extends comment period... The Department of Energy (DOE) announced that its Office of Fossil Energy and Carbon Management will resume reviewing pending applications for liquefied natural gas (LNG) export licenses to countries with which the U.S. has free trade agreements (FTAs). Additionally, the Biden administration has extended the public comment period on its LNG export study from Feb. 18 to March 20. This decision aligns with directives issued through executive orders by President Trump on Jan. 20. The review of LNG export licenses will occur concurrently with a multi-agency review under the National Environmental Policy Act (NEPA) to enhance efficiency in regulatory processes.
SEC establishes crypto task force for regulatory framework... The Securities and Exchange Commission (SEC) has formed a crypto task force under acting Chairman Mark Uyeda, chaired by Commissioner Hester Peirce. Its mission is to create a clear regulatory framework for crypto assets, addressing registration, disclosure rules and enforcement strategies. The task force will work with other financial regulators, including the Commodity Futures Trading Commission, state and international authorities, and adhere to Congress’ statutory framework. Paul Atkins, the SEC-chair nominee, is expected to integrate the task force into his agenda after confirmation.