Weakening farm income prospects weigh on farmer sentiment

WEST LAFAYETTE, Ind. — Farmer sentiment about the ag economy is on a downward trend, according to the latest Purdue University/CME Group Ag Economy Barometer reading.

The index dropped 13 points in August, likely connected to farmers’ apprehension of declining crop prices and weakening farm income prospects.

Here are five takeaways from the report:

1. Farmer sentiment drops significantly — The barometer fell 13 points in August to 100, reaching levels not seen since the downturn in the U.S. farm economy from 2015 to 2016. Both the Index of Current Conditions and the Index of Future Expectations saw declines, with drops of 17 points to 83, and 11 points to 108, respectively.

2. Farmers concerned about weak commodity prices — Lower commodity prices have overtaken high input costs as the primary concern for 30% of farmers. Last year, only 20% of farmers cited weak commodity prices as their top issue, highlighting a growing unease about market conditions. High input costs are still a major concern and were mentioned by 33% of respondents.

3. Interest rate concerns ease — While interest rates remain on farmers’ radar, worries have eased. Only 17% of respondents identified rising interest rates as a top concern, down from 24% last year. Looking ahead, 68% of farmers expect rates to decrease over the next year, signaling optimism about future borrowing conditions.

4. Farm financial health worsens — The Farm Financial Performance Index dropped 9 points from July and 14 points from a year ago, reaching its lowest point since July 2020, during the COVID-19 pandemic. Weak financial conditions have also caused farmers to pull back on investments. The Farm Capital Investment Index fell to a reading of 31, matching its all-time low.

5. Farmland value expectations decline — Farmers’ outlook on farmland values continued to dim, with the Short-Term Farmland Value Expectations Index dropping 13 points to 105 — down 21 points from last year. The Long-Term Farmland Value Index also fell slightly by 4 points. Despite these concerns, 70% of farmers expect farmland cash rental rates to remain steady for the 2025 crop year, with only 16% anticipating a decrease.

Read the complete report at https://purdue.ag/agbarometer.