Farmer Sentiment Reaches Lowest Levels Since 2016
The Purdue University/CME Group Ag Economy Barometer recorded its lowest readings since March 2016 in September. Declining income expectations pushed farmer sentiment down as the barometer fell 12 points to 88, and the Index of Future Expectations dropped 14 points to 94. The Index of Current Conditions also fell 7 points to 76, which nearly matched levels seen in April 2020, during the height of COVID-19 concerns for farmers.
Farmers are concerned about commodity prices, input costs, the future of agricultural trade and how the upcoming election could affect their farm operations. When asked specifically about their biggest concerns for the upcoming year, low commodity prices and high input costs were locked in a virtual dead heat in September as the top 2 concerns for the upcoming year. Thirty-four percent of farmers in the survey chose input prices as a top concern, while 33% chose lower output prices as their biggest concern.
Trailing output and input prices as a key concern among producers was interest rates, selected by 17% of respondents. Producers’ concerns about commodity prices was backed up by their lack of confidence in the future of U.S. agricultural exports. This month, just 26% of respondents reported that they expect U.S. agricultural exports to rise over the next five years. Dating back to 2019, when this question was first posed, this was the least optimistic perspective offered by farmers regarding agricultural exports in a barometer survey. In a related question, 78% of producers in this month’s survey also said they are concerned that following the fall 2024 elections, there will be government policy changes that affect their farms.
The September survey marked the fourth year in a row that the barometer survey has included several questions focused on cover crop usage among corn and soybean producers. Consistent with prior year’s surveys, over half of respondents reported that they currently plant cover crops on part of their farm, and one in five respondents said they had planted cover crops in the past. Among farmers who reported that they currently plant cover crops, the proportion of their farm’s acreage devoted to cover crops has been rising. In 2021, 41% of cover crop users said they planted cover crops on more than 25% of their crop acreage. By 2023, that percentage had increased to 50%, and in this year’s survey, 68% of cover crop users reported planting cover crops on more than one-fourth of their farms’ acreage.
Summary: Concerns about low commodity prices coupled with high input costs leading to poor financial performance expectations weakened farmer sentiment for the second month in a row. This month’s sentiment decline pushed the Ag Economy Barometer index below 100, indicating farmer sentiment is lower than during the barometer’s base period of late 2015-early 2016 when farm incomes were very weak. Producers expect markedly worse financial performance for their farms in the upcoming year compared to their expectations at this time last year. Weak farm income expectations combined with lingering interest rate concerns and a pessimistic agricultural export outlook helped push the Short-Term Farmland Value Expectations Index below 100 for the first time since 2020.
Source: Ag.Purdue.edu