From staff reports In March, U.S. farmers felt more positively about their future, pushing the Purdue University/CME Group AG Economy Barometer up three points from February to 114.The Index of Current Conditions was at 101, two points below February, while the Index of Future Expectations reached 120, five points higher than in February. This means farmers believe their financial condition has deteriorated over the last year, but that it will improve in the next 12 months.
This month, almost half (48%) of farmers believed that U.S. prime interest rates will go down in the next year, up from the 35% who thought that rates would decrease back in December 2023. Approximately 32% of farmers believe interest rates will go up in the next 12 months, while 43% thought so in December. Only 20% of farmers are worried about interest rates going up this month, down 24% from in December. Lastly, 36% of farmers place high input costs as their top concern in this month’s survey.
In March, more farmers felt it was a good time to make big investments, increasing to 15% from 11% in the past two months. Among those who felt this way, 17% mentioned strong cash flows, and 26% said it was because farm dealers had more machinery in stock. Farmers who felt it was a poor time to invest pointed toward high machinery costs, construction costs and interest rates as their reasoning.
The Short-Term Farmland Values Index rose to 124 in March, a 9-point increase from February. In total, 31% of farmers expected values to rise. Some farmers felt that inflation expectations and strong cash flows would increase land values, while fewer farmers saw non-farm investor demand as a key factor affecting the farmland market.
Among companies, interest in using farmland for carbon sequestration and solar energy is increasing. Around 18% of respondents say they or their landowners were approached about Carbon Capture Utilization and Storage, while 12% reported discussing solar energy, up from 10% in February. Farmers have been offered long-term farmland lease rates of $1,000 or more per acre for these projects.
Many farmers are worried about policy changes following the fall 2024 elections. 43% think agriculture regulations will grow stricter, and 29% believe agricultural taxes will increase.
Farmer positivity improved in March because they expect a better financial future. More farmers believe it’s a good time to invest and are optimistic about farmland values.