Farmer sentiment improves amidst tariff uncertainty
In April, farmer sentiment improved as producers showed increased optimism regarding their current and future farm conditions, a recent report stated. The Purdue University/CME Group Ag Economy Barometer increased by 8 points to 148, up from 140 in March.
Specifically, the Index of Current Conditions rose by 9 points to 141, and the Index of Future Expectations increased by 8 points to 152. This positive shift occurred despite ongoing trade tensions with major U.S. trading partners like Mexico and Canada.
Notably, most farmers believe that the increased use of tariffs will ultimately benefit the U.S. agricultural economy, which is reflected in the higher future expectations. The survey was conducted between April 14 and 21.
Michael Langemeier, director of Purdue University’s Center for Commercial Agriculture, noted that farmers seem to be gaining confidence in the long-term outlook for agriculture, despite concerns about tariffs. He observed that some producers are beginning to look beyond immediate uncertainties and focus on future farm strategies.
The Farm Capital Investment Index increased to 61 in April, marking a 7-point rise from March and reaching its highest level since May 2021. Since the November 2024 election, attitudes toward large investments have shifted notably; the index averaged just 36 between May and October 2024 but rose to 54 from November through April, a 50% increase over six months. Additionally, 25% of producers now consider it a good time to make large investments, nearly double the percentage from the previous six months.
Despite this rise in investment optimism, about two-thirds of farmers still believe it is a bad time to invest, indicating ongoing caution among most producers. This cautious outlook aligns with the substantial decline in new farm equipment sales during the first quarter of 2025. According to the Association of Equipment Manufacturers, sales of tractors over 100 horsepower fell 19%, and new combine sales declined by 38% compared to the same period last year.
The Farm Financial Performance Index remained steady in April at 101, a slight decrease of 1 point from March. This is the fourth consecutive month the index has stayed above 100, suggesting that farmers generally expect their financial performance this year to match or slightly surpass last year's results.
Farmland value expectations weakened slightly in April, with the index dropping 8 points to 110. Fewer farmers anticipate higher land values over the next year, while an increased percentage expect values to remain stable.
The survey also explored farmers’ views on U.S. trade policies. Despite the overall improvement in sentiment, farmers remain concerned about the short-term effects of tariffs. Over half (56%) expect that tariffs will negatively impact their farm income in 2025. Additionally, 53% anticipate difficulties in obtaining inputs due to higher import tariffs, especially for fertilizers, parts for machinery, electronics, and crop chemicals.
Nonetheless, 70% of respondents believe that the increased use of tariffs will strengthen the U.S. agricultural economy in the long term.
