Ag Economy Barometer: Policy uncertainty weighs on farmers

WEST LAFAYETTE, Ind. — Farmers were less optimistic about the agriculture economy in March due to trade and farm policy concerns, according to the latest reading of the Purdue University/CME Group Ag Economy Barometer.

The barometer decreased 12 points to a reading of 140, down from 152 a month earlier.

“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,” said Michael Langemeier, the barometer’s principal investigator.

Since the election, trade policy has become a fast-growing concern, with 43% of respondents saying it’s the most critical issue on their farm. This is up from an average of 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, according to the report.

“The Short-term Farmland Value Expectation Index at 118 was unchanged from a month earlier,” said James Mintert, director of Purdue’s Center for Commercial Agriculture.

“It tells me that people are cautiously optimistic that farmland values will hold steady or maybe increase modestly in the year ahead. That’s a more optimistic outlook than we had late last summer and early last fall.”

Other Takeaways

• The Index of Future Expectations dropped 15 points and the Index of Current Conditions dropped 5 points.

• The Farm Capital Investment Index fell 5 points to 54 — still the second-highest reading since June 2021.

• The Farm Financial Performance Index decreased 8 points to 102.

• Seventy-four percent 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.

• 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.

Learn more at purdue.edu/agbarometer.