Farmer sentiment dips on weak crop prices, financial outlook

The August Purdue University/CME Group Ag Economy Barometer dropped 13 points from July, landing at 100 — a level similar to the early stages of the U.S. farm economy downturn from fall 2015 to winter 2016.

The Index of Current Conditions fell 17 points to 83, while the Index of Future Expectations decreased by 11 points to 108. This decline reflects growing concerns over weakening farm income prospects, as expectations for a strong fall harvest were overshadowed by falling crop prices.

The drop in these indices indicates that farmers are increasingly worried about a prolonged period of weak farm incomes, similar to the downturn experienced from 2015 to 2019. The survey was conducted from August 12 to 16, 2024.

The results show a shift in farmers’ concerns, with 30 percent now citing lower commodity prices as their primary worry, up from 20 percent a year ago, while 33 percent continue to point to high input costs. Interestingly, concerns over rising interest rates have diminished, with only 17 percent of farmers citing this issue, down from 24 percent last year. Looking ahead, 68 percent of respondents expect interest rates to decrease in the coming year, while just 19 percent anticipate an increase.

The Farm Financial Performance Index dropped 9 points from July and 14 points from a year ago, hitting its lowest level since July 2020, when COVID-related uncertainties were widespread. This decline reflects ongoing concerns about weak financial conditions, which in turn led many farmers to view this as a poor time to invest, causing the Farm Capital Investment Index to fall 7 points to 31, matching its all-time low.

Recent survey data on farmland values show that farmers are less optimistic than in previous years, with an increasing percentage expecting a decline in farmland values within the next year, consistent with the weak financial outlook.

The Short-Term Farmland Value Expectations Index fell 13 points in August to 105, leaving the index 21 points lower than a year ago and 41 points below its peak three years ago. The percentage of producers expecting a decline in farmland values over the next year rose from 13 percent in July to 24 percent in August. The Long-Term Farmland Value Expectations Index also weakened, dropping 4 points from July to 142.

Despite these concerns, most farmers expect farmland cash rental rates for the 2025 crop year to remain stable, with 70 percent anticipating no rate change and only 16 percent expecting a decline.

»Related: Farmer sentiment rises in July despite falling crop prices