Source: Purdue University
U.S. farmers’ perspective on the future improved in March helping to push the Purdue University-CME Group Ag Economy Barometer up 3 points from February to a reading of 114. The Index of Current Conditions at 101 was 2 points below a month earlier while the Index of Future Expectations reached 120, 5 points higher than in February.
The split between the current and future indices was driven primarily by farmers’ perception that their financial condition has deteriorated over the last year while they expect their financial situation to improve modestly in the next 12 months. The March Ag Economy Barometer survey was conducted from March 11-15, 2024.
Producers’ expectations for interest rates have shifted which could help explain why producers look for financial conditions to improve. This month nearly one-half (48%) of respondents said they look for the U.S. prime interest rate to decline over the next year. That’s up from 35% of farmers who said they expect rates to decline the last time this question was posed in December 2023. And just one-third (32%) of respondents in March said they expect interest rates to increase in the next 12 months compared to 43% of respondents who were looking for rates to rise in the upcoming year when polled in December.
Just 20% of respondents this month said the risk of rising interest rates was a top concern, down from 24% who chose it as a top concern in December. Producers remain focused on high input costs as their number one concern, chosen by 36% of respondents in this month’s survey.
Wrapping Up
Farmer sentiment improved modestly in March with the rise primarily attributable to producers expecting financial conditions on their farms to improve in the year ahead. The improvement in farmers’ financial outlook was buttressed by an improved interest outlook with nearly half of this month’s respondents saying they expect interest rates to decline over the next 12 months.
Consistent with expectations for an improvement in financial conditions on their farms, more producers said this is a good time to make large investments helping to push the Farm Capital Investment Index up 7 points compared to a month earlier.
Farmers’ short-run outlook for farmland values also improved this month as the short-run farmland index climbed 9 points above its February reading. Interest in using farmland for solar energy production and sequestering carbon appears to be on the rise with 12% of respondents discussing solar energy leases and 18% saying they or their landowners were approached about possible Carbon Capture Utilization and Storage on farmland.
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