The August Purdue University/CME Group Ag Economy Barometer dropped 13 points from July to a reading of 100, echoing levels seen from fall 2015 to winter 2016 during the early stages of a significant downturn in the U.S. farm economy. The Index of Current Conditions dropped 17 points to 83, while the Index of Future Expectations decreased by 11 points to 108.
Weakening farm income prospects weighed on farmers’ sentiment as the outlook for a bountiful fall harvest was more than offset by declining crop prices.
August’s survey results indicate a shift among farmers’ primary concerns, with 30% of respondents identifying lower commodity prices as their primary concern, compared to 33% who cited high input costs. Last year at this time only 20% pointed to weak commodity prices as a top concern. However, concerns about rising interest rates have lessened, with only 17% of farmers mentioning this issue, down from 24% last year.
The Farm Financial Performance Index dropped 9 points from July’s survey and 14 points from a year ago, reaching its lowest level since July 2020, when there was widespread uncertainty from COVID-related lockdowns. The decline in financial performance reflects ongoing concerns about weak financial conditions. In turn, weakening financial conditions led many farmers to say that now is not a good time to invest, resulting in the Farm Capital Investment Index falling 7 points to 31, matching its all-time low.
Despite concerns about weakening farm income, a majority of respondents expect farmland cash rental rates for the 2025 crop year to remain stable. According to this month’s survey, 70% of U.S. crop farmers anticipate that rental rates will stay the same, while only 16% expect a decline in lease rates.
The August survey was conducted from Aug. 12-16, 2024.
Weakening Farm Income Prospects Weigh On Farmer Sentiment
September 3, 2024
James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
In a sharp turnaround from July, farmer sentiment nose-dived in August. The August Purdue University-CME Group Ag Economy Barometer fell 13 points vs. July, leaving the index at 100, while the Index of Current Conditions fell 17 points to 83, and the Index of Futures Expectations shed 11 points to a reading of 108. Weakening farm income prospects weighed on farmer sentiment as the outlook for a bountiful fall harvest were more than offset by declining crop prices. This month’s decline in the barometer takes farmer sentiment back to the average level observed from fall 2015 to winter 2016, a period when farm incomes were declining sharply. The weakness in farmer sentiment could indicate that farmers expect this year’s farm income downturn to last for an extended period. Data collection for the August survey took place from August 12-16, 2024.
Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-August 2024.
Figure 2. Indices of Current Conditions and Future Expectations, October 2015-August 2024.
Over the last several months, farmers’ concerns about weakening commodity prices have become more evident in barometer surveys. In the August survey, producers’ concerns about commodity prices nearly eclipsed what has consistently been their top concern: high input prices. This month, 30% of respondents picked lower commodity prices as a top concern compared to 33% who chose high input costs. This was a marked departure from a year earlier when just 20% of survey respondents pointed to weak commodity prices as a top concern for their farm operation. At the same time, fewer respondents chose rising interest rates as a top concern. This month, 17% of respondents pointed to interest rates as a top issue, down from 24% a year ago. In a related question, two-thirds (68%) of respondents said they expect interest rates to fall during the upcoming year, while only 19% said they look for rates to rise.
Figure 3. Biggest Concerns for Your Farming Operation, June 2023-August 2024.
The August Farm Financial Performance Index fell 9 points below a month earlier and was 14 points lower than a year ago. This month’s reading was the weakest response to the financial performance question since July 2020, when COVID-related lockdowns still dominated the headlines. Consistent with expectations for weak financial conditions, producers again signaled that the ………
Read the full August Purdue University/CME Group Ag Economy Barometer report.