U.S. farmers' outlook improved in March, according to the Purdue University/CME Group Ag Economy Barometer, which rose to 114, up 3 points from February. The survey, conducted from March 11-15, 2024, indicated a mixed sentiment among farmers, with a slight decrease in the Index of Current Conditions but an increase in the Index of Future Expectations.
Key findings from the survey include:
Interest Rate Outlook: 48% of farmers expect a decline in the U.S. prime interest rate over the next year, a significant increase from December's 35%. The risk of rising interest rates is now a lesser concern among farmers, dropping to 20% from 24% in December.
High Input Costs Remain a Top Concern: Despite a shift in interest rate perspectives, 36% of respondents still prioritize high input costs as their primary concern.
Increased Investment Confidence: The Farm Capital Investment Index rose by 7 points, signaling a more favorable attitude towards large investments. 15% of producers believe it's a good time for significant investments, reflecting better cash flows and higher equipment inventories.
Optimism in Farmland Values: The Short-Term Farmland Values Index increased by 9 points to 124. 38% of producers expect a rise in farmland values, with non-farm investor demand, inflation expectations, and strong cash flows being key factors.
Growing Interest in Land Use for Carbon and Solar Projects: Around 18% of respondents were approached about Carbon Capture Utilization and Storage (CCUS) on their land, and 12% engaged in discussions regarding leasing farmland for solar energy projects.
Concerns Over Government Policies: Many farmers are apprehensive about possible government policy changes post-elections, with 43% anticipating more restrictive agricultural regulations and 39% expecting an increase in taxes impacting agriculture.
Overall, the survey highlights a cautious yet improving sentiment among U.S. farmers, balancing current challenges with hopeful expectations for the future.
