Key Takeaways:
- The Purdue University/CME Group Ag Economy Barometer dropped 12 points in September to its lowest reading since March 2016, reaching 88.
- Farmers cited low commodity prices (33%) and high input costs (34%) as their top concerns for the coming year.
- 78% of farmers expressed concerns about potential government policy changes following the 2024 elections.
- The Farm Financial Performance Index fell for the third consecutive month, while short-term farmland value expectations declined for the first time since 2020.
In September, the Purdue University/CME Group Ag Economy Barometer recorded its lowest level since March 2016, reflecting growing concerns about declining farm income and overall economic uncertainty. The barometer fell 12 points to 88, driven by pessimism about income expectations and market conditions. The Index of Future Expectations also dropped 14 points to 94, while the Index of Current Conditions fell 7 points to 76, a level nearly matching those seen in April 2020, during the peak of COVID-19 concerns among farmers.
Concerns Over Commodity Prices and Input Costs Dominate
The September survey, conducted from Sept. 9-13, 2024, revealed that farmers are increasingly worried about commodity prices, input costs, and agricultural trade prospects. 34% of farmers cited high input prices as their top concern, while 33% pointed to low commodity prices. Rising interest rates were also a significant concern for 17% of respondents.
Producers expressed pessimism about the future of U.S. agricultural exports, with only 26% expecting exports to rise over the next five years—the lowest confidence level since this question was introduced in 2019. Additionally, 78% of farmers expressed concern that government policy changes following the 2024 elections could negatively impact their farms.
“The continued drop in the barometer reflects deepening concerns among farmers regarding expectations for farm income in 2024 and 2025,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “It’s notable that producer sentiment dropped back to levels last seen in 2016 when the U.S. farm economy was in the early stages of an economic downturn.”
Declining Financial Performance and Investment Sentiment
The Farm Financial Performance Index fell for the third consecutive month, dropping to 68 in September from 72 in August. This decline highlights the growing uncertainty surrounding farmers’ financial expectations, which have dropped 18 points from 86 in September 2023.
While the Farm Capital Investment Index saw a slight increase of 4 points, reaching 35, it remains just above its all-time low. This low reading indicates that many farmers believe it is not a favorable time for making large investments in their operations.
Short-Term Farmland Value Expectations Drop
The Short-Term Farmland Value Expectations Index experienced a significant decline, dropping 10 points to 95, marking the first time since 2020 that the index fell below 100. This shift reflects more farmers expecting farmland values to decline over the next year, rather than increase, with fewer producers forecasting rising values and more expecting them to remain steady.
Trends in Cover Crop Usage
The September survey also marked the fourth consecutive year of questions on cover crop usage among corn and soybean producers. Consistent with previous years, more than half of respondents indicated they currently plant cover crops on part of their farms, and an additional 1 in 5 reported planting cover crops at some point in the past.
Interestingly, farmers using cover crops are now devoting a larger portion of their farm’s acreage to these practices. In 2021, 41% of cover crop users planted them on more than 25% of their farm’s acreage. This figure rose to 50% in 2023, and in this year’s survey, 68% of cover crop users indicated they plant cover crops on more than one-fourth of their farms.
Read the complete report here.