And the Policy Will Be

Decisions on federal policies played an oversized role in agriculture’s fortunes in 2025. 2026 is likely to be the same. Key policies to watch are:

Trade Policy

Trade policy will continue to cause headaches for agriculture. The constitutionality of many of the tariffs imposed by President Trump last year is before the U.S. Supreme Court. A decision is expected very soon. A decision against the President, which pundits expect, wouldn’t necessarily end the tariffs for the long-term, but would cause uncertainty in the short-term. Such a decision could require refunds of tariffs already collected. And it’s likely President Trump would pursue other avenues in law to reimpose tariffs. Uncertainty around how tariffs would be reimposed, what they would equal, and which ones could affect agriculture would abound. Also, the United States, Mexico, and Canada Agreement (USMCA) is up for review this year. Agriculture has benefitted mightily from greater North American trade stemming from trade agreements. Mexico and Canada are consistently the largest purchasers of U.S. agricultural products. Any hiccup regarding the agreement could damage these benefits. Look for trade policy to continue be unsettled in 2026 with continued ramifications for agriculture.

Farm Programs

Having failed to pass a Farm Bill the previous two years, Congress incorporated a few farm program changes into the One Big Beautiful Bill Act passed last year. The changes are effective for the 2025 crop year and could provide an estimated $700+ million in farm program payments to Nebraska producers in October. However, several Farm Bill programs have yet to be renewed. Conservation programs, rural development, research, forestry, specialty crops, and others continue to operate under one-year extensions. Efforts will be made to pass a “skinny” Farm Bill in 2026 to renew these programs. Pundits, though, are skeptical if it will occur.

Monetary Policy

Questions hover over the Federal Reserve and monetary policy entering the year. Last year the central bank, concerned with slowing labor markets, reduced the federal funds rate three times. By the end of the year the rate ranged between 3.5-3.75%. If inflation remains higher than the Federal Reserve’s target of 2.0%, and unemployment ticks higher too, the Federal Reserve will have a decision to make: raise rates in an effort to slow inflation and risk slower economic growth and higher unemployment; or, lower rates to encourage growth and employment and risk sparking even higher inflation. President Trump clearly wants lower rates to reduce the federal government’s interest payments. The Federal Reserve’s decision will be important for production agriculture. Changes in rates can affect interest costs, land values, export competitiveness, and input costs.

Renewable Fuels

This year could see several federal renewable fuel policies considered and finalized. Last year, the EPA announced a proposed rule which would increase the renewable volume obligations (RVOs) for biodiesel and renewable diesel. The rule also stated imported fuel and fuel made domestically with imported feedstocks can only earn half the credits of domestically-produced fuel. The RVO for conventional ethanol was maintained at 15 billion gallons. A final decision on the rule will be made this year, along with a decision on small refinery exemptions under the RVO. Final decisions on 45Z tax credits for renewable fuel production, revamped under the OBBBA, should also be made in 2026. And finally, ethanol supporters are seeking a change in policy to allow the year-round sales of E15 blended fuels nationwide. Decisions on these rules will affect the consumption and usage of renewable diesel, sustainable aviation fuel, and ethanol, which, in turn, will affect the use of feedstocks like soybeans and corn.