Producer sentiment slips due to rising policy uncertainty

April 1, 2025:

Farmer sentiment declined in March as concerns over agricultural trade and farm policy weighed on producers’ outlook for the future. The Purdue University/CME Group Ag Economy Barometer fell 12 points to a reading of 140, down from 152 a month earlier. Contributing to the weakened sentiment in March was a 15-point drop in the Index of Future Expectations to 144 and the Current Conditions Index falling 5 points to 132. The drop in sentiment was influenced by falling crop prices since mid-February, along with increasing uncertainty surrounding agricultural trade and farm policy. Despite the decline, producers remained more optimistic about future conditions than the present, with the Future Expectations Index remaining higher than the Current Conditions Index by 12 points. This month’s survey was conducted between March 10-14.

Alongside the weakened sentiment, the Farm Capital Investment Index fell 5 points to 54 in March. Despite the dip, it is the second-highest reading since June 2021. The Farm Financial Performance Index also saw a drop, decreasing 8 points to 102. While slightly above 100, the index indicates that, on average, producers still anticipate their farm’s financial performance to improve compared to a year ago.

The Short-Term Farmland Value Expectations Index remained steady at 118 in March, matching the previous month’s level and only 6 points below its reading from a year ago. Except for the late summer and early fall of 2024, when sentiment was more pessimistic, the index has generally ranged between 110 and 126 since early 2023. This suggests that farmers maintain a cautious outlook for farmland values, anticipating they will either remain stable or increase modestly in the coming year. While the overall sentiment shift in March reflects growing uncertainty, farmers remain cautiously optimistic about the future, particularly with farmland values holding steady and the outlook for strong returns in the livestock sector helping to offset weaker expectations among crop producers.

Since 2019, the barometer surveys have asked producers about their expectations for U.S. agricultural exports over the next five years. Historically, exports have been a primary driver of U.S. agricultural production demand and are closely linked to strong farm incomes. Producers reported they were optimistic about export growth in 2019 and 2020 surveys, but that optimism began to decline in 2021 and has continued to erode. In March, expectations for U.S. exports reached a record low in the survey, with 30% of producers anticipating a decline in exports, nearly matching the 33% who expect exports to rise.

In addition to worries about exports, farmers’ focus on agricultural policy has shifted over the past year. Since late 2022, barometer surveys have regularly asked producers to identify the most important policies or programs for their farms in the next five years. Before the November 2024 election, farmers reported a higher focus on interest rate policy than trade policy. However, since the election, trade policy has become a fast-growing concern, with 43% of respondents, on average, now citing it as the most critical issue impacting their farms, up sharply from an average of just 21% prior to the election.

Uncertainties about trade policy and its potential impact on U.S. agricultural exports are closely tied to farmers’ expectations for farm income. The March survey asked producers about the likelihood of a program similar to 2019’s Market Facilitation Program, created to compensate for lower output prices due to a trade war. Approximately two-thirds of respondents believe a follow-up to such a program is either “likely” (52%) or “very likely” (13%) to be implemented. Additionally, 74% of farmers in March indicated that the passage of a new farm bill this year was either “very important” (49%) or “important” (25%) to them.

Purdue/CME Group Ag Economy Barometer, March 2025.

March 4, 2025:

U.S. farmer sentiment continued its upward trend in February 2025, as the Purdue University/CME Group Ag Economy Barometer rose 11 points from the previous month to a reading of 152. The boost was primarily driven by the stronger sentiment among producers, with the Current Conditions Index climbing 28 points to 137 — marking a significant rebound from its low of 76 in late summer and early fall 2024. In contrast, the Future Expectations Index saw only a modest increase, rising 3 points to 159. The recent upswing in sentiment reflects a combination of factors, including a sharp recovery in crop prices, expectations for disaster payments authorized by Congress and continued strength in the U.S. livestock sector. Despite the notable improvement in current conditions, farmers remain more optimistic about the future, as the Future Expectations Index continues to outpace the Current Conditions Index by 22 points. This month’s survey was conducted between Feb. 10-14.

The Farm Capital Investment Index jumped 11 points in February to a reading of 59, reaching its most positive level since May 2021. This month’s increase also placed the index 4 points above its November postelection reading. Compared to previous months, where future expectations primarily led investment sentiment, February’s increase was driven by farmers’ improved assessment of current conditions. Meanwhile, the Farm Financial Performance Index held steady at 110, nearly unchanged from January’s reading of 111. Although the index saw little movement this month, it remains well above last fall’s low of 68.

The Short-Term Farmland Value Expectations Index modestly increased in February to 118, a 3-point increase from January and 8 points higher than December. This month’s reading was also 3 points above its level from a year ago and nearly the same as two years ago. While producers remain less optimistic about farmland values than they were during the winters of 2021 and 2022, sentiment has improved compared to the more cautious outlook seen in late summer and early fall 2024. While sentiment about the future remains strong, as reflected in the Future Expectations Index, there’s growing interest in making larger investments in farm operations, suggesting that farmers are feeling more confident about their ability to grow despite the challenges ahead.

Each February, the barometer survey asks producers about their five-year growth expectations for their farm operations. In the 2025 survey, 50% of respondents indicated they either have “no plans to grow” (37%) or “plan to exit or retire” (13%), nearly unchanged from 52% in 2024. Since 2016, the share of producers in these two categories has ranged from a low of 43% in 2016 to a high of 61% in 2022. This year’s biggest shift came from a decline in the percentage of producers expecting slow growth (less than 5%) and a corresponding increase in those anticipating higher growth rates. Nineteen percent of respondents noted expectations for their farm to grow by 10% to 15% or more annually — more than double the 9% who projected similar growth last year.

Policies impacting agriculture are top of mind for U.S. farmers. Sixty-two percent of survey respondents in February indicated that passing a new farm bill in 2025 is either “important” (25%) or “very important” (47%). When asked about the most crucial policies for their farm over the next five years, 44% cited “trade policy” as their top concern, followed by “crop insurance program” at 18%. Concerns about trade policy were also evident when producers were asked about the likelihood of a “trade war” that results in a significant drop in U.S. agricultural exports. Forty-eight percent of farmers in this month’s survey believe a trade war is either “likely” (29%) or “very likely” (19%). While the current outlook for U.S. agriculture has improved, farmers are closely watching trade policy and the potential for a new farm bill, both of which are key factors shaping their long-term expectations. These ongoing policy concerns will likely play a critical role in shaping producer sentiment in the months ahead.

Purdue/CME Group Ag Economy Barometer, February 2025.

February 7, 2025:

U.S. farmers began 2025 with an optimistic outlook, as the January Purdue University/CME Group Ag Economy Baromete r rose 5 points from the previous month to a reading of 141. This increase was driven by a 9-point growth in the Current Conditions Index and a 3-point rise in the Future Expectations Index. The improvement in sentiment was linked to higher crop prices between December and mid-January and fewer producers citing crop and livestock prices as a top concern. For instance, Eastern Corn Belt prices for near-term delivery of corn and soybeans rose by 9% and 5%, respectively, during that period. While farmers’ views of current conditions improved, optimism about the future remained even stronger, with the Future Expectations Index exceeding the Current Conditions Index by 47 points. This month’s survey was conducted between Jan. 13-17.

The Farm Financial Performance Index climbed 13 points in January, reflecting a similar rise in the Current Conditions Index and indicating that producers, on average, anticipate 2025 will be a more robust financial year than 2024. Meanwhile, the Farm Capital Investment Index remained steady at a reading of 48, unchanged from December. Despite no change, the investment index remains significantly higher than last summer’s low of 31 and represents the second-highest reading of the past three years. Producers’ optimism about the future appears to support the stronger investment index, though it remains uncertain whether this optimism will lead to more farm machinery or new construction investments.

The January survey reflects a notable sense of optimism among U.S. farmers, particularly regarding their expected financial performance in 2025. Recent improvements in crop and livestock prices have provided a boost to farmers’ current sentiment. Although farmers are optimistic about the future, there are some clouds on the horizon. For example, more farmers this month reported challenges in paying off operating loans compared to the last couple of years, and many producers are worried about the future of agricultural trade, with 40% of this month’s respondents saying they think a trade war is either likely or very likely.

The Short-Term Farmland Value Expectations Index rose 5 points in January to a reading of 115, returning to its November level. Farmers’ confidence in rising farmland values, which dipped late last summer amid weaker crop prices, has stabilized since October, with the index fluctuating between 110 and 120 in recent months. January’s modest improvement reflects a higher percentage of producers expecting values to increase, coupled with fewer expecting values to remain unchanged. Meanwhile, the Long-Term Farmland Value Expectations Index, which gauges expectations for the next five years, declined 5 points to 150. Despite the dip, the long-term index remains 8 points above its 12-month low recorded last August.

The January barometer survey, which has annually included questions about farmers’ operating loans for the upcoming year since 2020, revealed a slight increase in the percentage of producers anticipating larger loans this year — 18%, up from 15% in 2024. Among those expecting an increase, 23% attributed it to carrying over unpaid operating debt from the previous year, compared to 17% last year and just 5% two years ago. The shift reflects a decline in farm income, particularly crop income, over the past two years and could be an early signal of rising financial stress among producers.

Agricultural trade remains a top concern for U.S. farmers. In January, 42% of producers identified “trade policy” as the most important policy for their farm over the next five years, more than double the 17% who selected “crop insurance program.” While there is still significant concern among U.S. farmers that a trade war could break out that negatively impacts U.S. ag exports, responses regarding worries about a potential trade war have eased slightly since December, with 40% of producers now believing a trade war is “likely” or “very likely,” down from 48% the previous month. Meanwhile, the percentage of farmers who see a trade war as “unlikely” or “very unlikely” rose from 21% in December to 29% in January.

Interest in leasing farmland for solar energy production continues to grow. In January’s survey, 11% of farmers reported discussing solar leases for their land within the last six months. Lease rates offered by solar energy companies in 2024 and 2025 were notably higher than in previous years, with 40% of respondents reporting offers of $1,250 per acre or more and 26% receiving offers of $1,500 per acre or more. Additionally, 54% of respondents noted that contracts included escalator clauses, most commonly ranging from 2% to 3% annually, though some reported escalators of 3% to 4% per year. Overall, 3% of survey respondents said either they or one of their landowners had signed a solar lease.

Purdue/CME Group Ag Economy Barometer, January 2025.

Producer sentiment slips due to rising policy uncertainty

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