Company: AGM-PH
Filing Date: 2025-11-03
Form Type: 10-Q
Source: 0000845877-25-000252
Chunk: 97

Company: FEDERAL AGRICULTURAL MORTGAGE CORP
Filing Date: 2025-11-03
Form: 10-Q
Item: Part I, Item 1
Chunk 97
---
 that U.S. agriculture exports will drop to $173 billion in 2025, 1% lower than 2024 and down 12% relative to peak levels in 2022. The USDA incorporated the expected impact of tariffs in its August Outlook for U.S. Agricultural Trade report, but the export forecast could shift depending on the implementation of future trade policies. Through July 2025, agricultural export values were 1% lower in 2025 relative to 2024. Slower global growth could be a headwind for consumer-oriented products like animal proteins, dairy, fruits, and nuts. Looking ahead, economic and geopolitical uncertainties could lead to higher volatility for the U.S. dollar throughout the rest of 2025.  

Drought conditions increased modestly in intensity and prevalence in third quarter 2025. Through the first half of 2025, drought conditions in the continental U.S. were largely concentrated across several western and southwestern states. Nearly one-quarter of California was classified as in severe drought in second quarter 2025, up from 0% at the beginning of 2024. Drought conditions emerged across much of the eastern half of the U.S. in third quarter 2025, including several Corn Belt states such as Illinois, which was facing severe drought conditions or worse across 50% of the state as of October 2025. It is unclear what impact drought conditions across the central and eastern portions of the U.S. might have on U.S. crop yields. However, the emergence of drought conditions in these areas occurred relatively late in the growing season, potentially minimizing the impact. In total, approximately 23% of the continental U.S. was classified as being in severe to exceptional drought as of October 2025 according to data from the National Center for Environmental Information, the National Drought Mitigation Center, USDA, and the National Oceanic and Atmospheric Administration.

81

The ongoing implementation of groundwater management regulation, especially in California, continues to influence land values in many regions of the state. Farmer Mac works closely with water consultants and collateral valuation professionals to identify properties influenced by changing water availability. For loans in areas that commonly experience exceptional drought (primarily in California), Farmer Mac's underwriting standards include an assessment of anticipated long-term water availability for the related property and how water availability impacts the collateral value and the borrower's liquidity position to mitigate that risk. 

Agricultural Processing and Food Supply Chain

The production of food, feed, fiber, and biofuels has been economically viable in