U.S. farmers are increasingly pessimistic about their financial futures as declining income expectations drove the Purdue University-CME Group Ag Economy Barometer Index to its lowest level since March 2016. The index fell 12 points in September to a reading of 88, reflecting growing concerns over low commodity prices and high input costs.
Both sub-indices of the barometer declined, with the Current Conditions Index dropping to 76 and the Future Expectations Index falling to 94. These readings mirror levels last seen during the height of COVID-19 concerns in April 2020, highlighting the depth of economic uncertainty felt by agricultural producers.
"Farmers are facing a challenging environment with weak output prices, high costs, and a lack of confidence in future trade prospects," said James Mintert, director of Purdue's Center for Commercial Agriculture. "This combination is pushing sentiment down across the board."
The survey, conducted from September 9-13, 2024, found that 34% of respondents cited high input costs as their top concern, while 33% pointed to lower output prices. An additional 17% expressed worries about rising interest rates. Compounding these concerns, just 26% of farmers believe U.S. agricultural exports will increase over the next five years—the lowest confidence level recorded since this question was first posed in 2019.
Additionally, 78% of farmers expressed concern that the upcoming 2024 election could lead to policy changes that negatively affect their operations.
The Farm Financial Performance Index dropped for the third consecutive month, reaching a score of 68, compared to 86 a year earlier. Although the Farm Capital Investment Index rose slightly to 35, it remains at historically low levels as most producers continue to view it as a poor time to make major investments.
The Short-Term Farmland Value Index also took a hit, falling 10 points to 95. For the first time since 2020, more farmers expect farmland values to weaken in the coming year than expect them to rise. In contrast, the Long-Term Farmland Values Index showed a slight increase, suggesting that producers still see value in land as a long-term investment.
Despite the overall negative sentiment, some bright spots emerged in cover crop usage trends. The survey found that 68% of farmers who plant cover crops are now using them on more than 25% of their acreage, up from just 41% in 2021.
As farmers grapple with the twin pressures of low commodity prices and high costs, the industry will be keeping a close watch on policy developments and market trends that could shape the agricultural landscape in the coming year.
