Farmers Say Current Conditions on U.S. Farms are Weakening

DAILY Bites

• Ag Economy Barometer rose 1 point to 126 as optimism for the future offset weaker current conditions.

• Fewer farmers see it as a good time to invest; farm financial and capital indexes both declined.

• Confidence in tariffs fell, but 83% expect government aid if trade tensions lower prices.

DAILY Discussion

Farmer sentiment held steady in September, as the Purdue University/CME Group Ag Economy Barometer rose just 1 point to a reading of 126. However, there was a shift in producers’ perceptions of current conditions and their expectations for the future.

The Index of Current Conditions fell 7 points to 122, while the Index of Future Expectations climbed 5 points to 128. The survey was conducted following the U.S. Department of Agriculture’s release of the September Crop Production report and the World Agricultural Supply and Demand Estimates report.

These reflected farmers’ concerns about current conditions, particularly over record-high corn and soybean yields, which were pressuring crop prices. At the same time, optimism about the future was supported by farmers’ belief that U.S. policy is “headed in the right direction” and by expectations that potential government support, like the 2019 Market Facilitation Program, will provide payments to farmers in compensation for lower commodity prices. The barometer survey took place Sept. 15-19.

The September Farm Financial Performance Index dropped 3 points to a reading of 88, marking the third consecutive month farmers have lowered their expectations for 2025 compared with 2024. Consistent with this more cautious outlook, fewer producers said now is a good time to make major investments in their operations, pushing the Farm Capital Investment Index down 8 points to 53.

Producers’ short-term outlook for farmland values weakened for the fourth month in a row, as the Short-Term Farmland Values Expectations Index fell 6 points to 106. The index now stands 18 points below its 2025 peak from May of 124. The shift was driven by fewer producers expecting farmland values to rise and more anticipating farmland values to remain about the same, with 58% of respondents saying they expect farmland values to hold steady over the next year, up from 54 percent in August.

Policy changes appear to continue to shape farmers’ perspectives in September. A substantial majority (71 percent) of farmers in this month’s survey reported that things in the U.S. are “headed in the right direction,” similar to the July and August survey results. However, confidence in the long-run impact of tariffs has weakened. Just over half of respondents (51 percent) said they expect tariffs to strengthen the U.S. agricultural economy, down from 63 percent of June’s survey respondents and 70 percent of respondents in both the April and May surveys who said they expect the use of tariffs to have a long-term positive impact. At the same time, 30 percent now believe tariffs will weaken the agricultural economy, and 19 percent are uncertain — more than double the number of respondents who were uncertain in the spring.

Amidst growing concerns about tariffs, most farmers expect potential government support to help cushion the impact. In September, 83 percent of producers said a program similar to the 2019 MFP is likely if a trade war drives commodity prices lower, with 62 percent calling it “very likely” and another 21 percent, saying it is “likely.”

Each September since 2021, the Ag Economy Barometer survey has included several questions focused on cover crop usage by corn and soybean farmers, and just over half (53 percent) of farmers surveyed this month reported using cover crops on at least some of their acreage, a share that has ranged between 52 percent and 57 percent over the past five years. Among cover crop users, 40 percent said they adopted the practice within the last five years, while 9 percent have used cover crops for more than two decades. Survey trends also point to broader adoption across acreage: This year, 57 percent of cover crop users planted them on 26-50 percent of their acres, compared to only 25 percent in 2021 who reported planting cover crops on more than one-fourth of their acreage.

High production costs and weak crop prices are pressuring farm incomes on U.S. crop farms. A large majority of U.S. farmers expect government support to bolster farm incomes if crop prices remain weak.