Company: AGM-PH
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0000845877-25-000152
Chunk: 261

Company: FEDERAL AGRICULTURAL MORTGAGE CORP
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 261
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 and trade policy, supply chain disruptions, and weather and environmental conditions. The U.S. agricultural sector has become increasingly dependent on foreign markets as a source of demand, making trade policy an important consideration for farms and food. The USDA projects that U.S. agriculture exports will drop to $170.5 billion in 2025, 3% lower than 2024 and down 13% relative to peak levels in 2022. This forecast did not contemplate the potential effects of the Administration's current policies and proposals on tariffs and trade restrictions, so the forecast could shift depending on the implementation of future trade policies. Through February 2025, agricultural export values were 8% lower in 2025 relative to 2024. Slower global growth could be a headwind for consumer-oriented products like animal proteins, dairy, fruits, and nuts. Ukrainian corn and wheat export shipments continue to rebound and have approached pre-2022 levels in recent months. Looking ahead, economic and geopolitical uncertainties could lead to higher volatility for the U.S. dollar through 2025.  

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Severe weather conditions continue to shape agricultural sectors. In 2024, the U.S. experienced 27 separate billion-dollar weather disasters, as tracked by the National Oceanic and Atmospheric Administration. Many of those events affected agriculture, including midwestern storms, flooding, western wildfires, excessive heat, and drought. Through March 31, 2025, Farmer Mac's portfolio had not experienced any material performance degradation as a result of these events. Federal crop insurance provides a strong mitigator against this risk, but farmers and ranchers face increasingly severe weather incidents and production volatility. 

Drought conditions increased modestly in intensity and prevalence in first quarter 2025, largely across several western and southwestern states. Nearly one-quarter of California was classified as in severe drought in first quarter 2025, up from 0% at the beginning of 2024. Farmer Mac had minimal exposure to the areas affected by the southern California wildfires in early 2025. Texas has also seen drought conditions intensify with nearly half the state experiencing severe drought conditions or worse in first quarter 2025. As of April 15, 2025, 20% of the continental U.S. was classified as being in severe to exceptional drought according to data from the National Center for Environmental Information, the National Drought Mitigation Center, USDA, and NOAA.

For loans in areas that commonly experience exceptional drought (primarily in California), Farmer Mac's underwriting standards include an