Farmer Sentiment Is Falling Amid Higher Input Costs

Farmer sentiment declined in April—the pressure on the farm economy is intensifying.

In this episode of the Purdue Commercial AgCast, Joana Colussi and Michael Langemeier break down the April 2026 Purdue University/CME Group Ag Economy Barometer. Rising input costs, increasing concern about fertilizer availability, and global uncertainty tied to geopolitical conflict all contributed to a drop in sentiment.

Tighter margins, rising break-even costs, and weaker financial expectations are beginning to influence how farmers approach investment, growth, and risk management heading into 2026.

More importantly, these signals highlight how producers are shifting from cautious optimism to a more defensive posture.

In this episode, we discuss:

• What’s driving the recent decline in farmer sentiment
• How fertilizer prices and input availability are impacting decisions
• Why 2/3 of farmers expect lower income in 2026
• What rising break-even prices mean for crop profitability
• Why farmers are pulling back on machinery and capital investments
• The widening gap between crop and livestock outlooks
• How tight margins are influencing cash flow and strategy
• What’s shaping farmland value expectations
• Why confidence in the broader U.S. economy is slipping

📊 Read the full Ag Economy Barometer report: https://purdue.ag/barometer127

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Episode Transcript

(00:05):
Welcome to Purdue Commercial AgCast.
I am Joana Colussi, research assistantprofessor in agriculture economics,
and I'm here with Michael Langemeier,professor and director of Purdue
Center for Commercial Agriculture.
Today, we are talking about theresults of the April 2026 Purdue
University-CME Group Ag Economy Barometer.

(00:28):
Each month, we surveyed 400 farmers acrossthe United States to get a sense of how
they are feeling about the ag economy.
This month's survey was conductedfrom April 13 to April 17.
Before we get started, as always,please like this video, subscribe to
the channel, and turn on notificationsso you don't miss future episodes.

(00:55):
So let's look at the resultsfrom the Ag Economy Barometer.
Farmer sentiment decreased from 127points in March to 121 in April.
And unlike last month, the bothCurrent Conditions Index and the
Future Expectations Index moved lower.

(01:16):
The Current Conditions Index fellby 11 points, while the Future
Expectation Index was down four, points.
The Future Expectation Indexwas 16 points down last December
and 26 points below last April.
Michael, what do you think is driving thischange from April, from March to April?

(01:40):
I think the primary driver is input costs.
I mean, if you look at fertilizer pricesfor nitrogen, for example, nitrogen price,
if you look at April 2025 to April 2026is up 42%, and that increased from Marc-
from March this year to April this year,and so that's certainly contributed.
In fact, 46%, indicated that inputcosts were their biggest concern.

(02:04):
That was the same as last month.
But there was an uptick in thepercentage that were worried
about input availability.
That was 11% of, of the people hadthat as, as their biggest concern.
That moved up to 14%.
And so I, I think what's going onwith, with fertilizer and energy was
a big part of the, of the drop, in theoverall index and certainly, the drop

(02:25):
in the index of current conditions.
And related to that, this month'ssurvey asked farmers about the
potential impact of the Iran conflicton the net farm income and corn
break-even prices in 2026, and thereis a direct relation with fertilizers.
About t- Two-thirds of respondentssaid they expect their net farm income

(02:48):
to decline because of the conflict.
And for the farmers in our surveythat, who planted corn in 2025, over
70% of the respondents, 14%, expectedbreak-even prices to increase 6 to
9%, and 38% expect break, break-evenprices to increase 10% or more.

(03:13):
Michael, these numbers reallysuggest that farmers are concerned
about how the conflict willaffect their operations, right?
Yeah, certainly we expected a, a,that the net farm income would, would
have a neg- would have a negativeimpact on the net farm income.
It's always, it's always hard todetermine what exactly percentage
would say, it's gonna have a negativeeffect, but I, as you indicated,

(03:34):
two-thirds is a rather large number.
What was a little surprising when weasked the question about break-even
prices to those that have corn, whichby the way is about three-fourths of
the sample, this month, 53% of thesample are, are primarily corn and
soybean producers, but, there's alarger group that grows corn, close to
three-fourths, and so that was a prettysubstantial group of, of, of respondents.

(03:55):
That's about 300 respondentsto that question.
I was a little surprised that,that, 37, 38%, thought their
break-evens would go up 10% or more.
That's a large shift in the break even.
There's no wonder, there's a drop inthe Index of Current Conditions if
they're expecting that large of impacton, on, on corn break-even price.

(04:15):
Yeah, we didn't ask specificallyabout- fertilizers- Yeah ... but
that's likely a big part of-Yes ... what, farmers have in mind.
Yeah.
Michael, how does the currentfertilizer situation actually
compare to 2022, especially interms of, price and cost production?
We know that time- Yeah between theRussia, and Ukraine conflict, the

(04:37):
situation was different in terms of price.
Well, if you look at anhydrous, likeI said, it's up 42% year to year.
And it, it's approachinglevels that we saw back in '22.
It's not quite there yet.
Anhydrous, got up to $1,500 or slightlymore, in, in '22, and it's, it's sitting
about 1,150 right now, $1,150 per ton.

(04:58):
Certainly a very large increase, butit's not quite at the '22 levels.
What's differs this time around is, is,is there hasn't been as much impact,
on, on P and K, this time around.
The, the Iran conflict has really hada large impact on anhydrous and urea.
The impact on phosphorus and potassium,has, has been relatively smaller.

(05:19):
If you look at, year to year increases inP and K, P is up 15%, most of that not due
to the Iran conflict, but it's still up.
And, and, and K is up 8%, and so,you combine all of those increases
and, and you can see why, peopleare expecting their break even
to change quite a bit, this year.
Especially for corn, that's heavily-

(05:39):
Particularly for corn ... dependent.
Less impact on soybeans, but that'swhy I mentioned P and K. It, it's
still gonna have a... we're stillgonna see, soybean break even prices
higher this year, than last yearbecause of fertilizer price increases.
Yeah.
And if you look at the results,we continue to see a large gap
in expectations between cropand livestock producers, and
fertilizers, help to explain that.

(06:02):
According to the survey, only 31%of respondents expected good times
for crop producers over the nextfive years, while 69% expected
good times for livestock producers.
So there is a gap, uh, between thesentiment when you compare, right?
Yeah, this is about the largestgap we've seen, but it has been

(06:22):
running about at least 30-pointdifference, between crop and livestock.
But, as you noted with the numbers,it's close to a 40-point, difference
this time, and it just reflects thefact that the, the beef industry in
particular, cow-calf, sector o- of thebeef industry in particular, is doing
quite well, where most of the cropproducers are not doing very well.

(06:43):
Very tight margins before, the Iran co-conflict, and it's safe to say, they've
gotten even, you know, even, even tighter.
Yeah, and we have seen that since lastyear- Yes ... now become more and more.
Yeah.
So let's turn to the Farm CapitalInvestment Index, which dropped by
nine points to 44, reaching the-its lowest value since October 2024.

(07:07):
Michael, what is behind these numbers?
I think the, the fact that the in- theIndex of Current Conditions dropped
so sharply, is related to the drop in,in the Farm Capital Investment Index.
We've talked about this in previous,previous AgCast, but when you look at
cash flow, farmers typically try tocover operator withdrawals and, and
repay debt before, they cover new,new purchases, down payments, for new

(07:31):
machines, and down payments on buildings.
And because the cash flow is even tighter,in April than it wa- it has been in
previous months, there's just not a lotof room, a lot of cash flow left, to
buy machinery and, and, and therefore,the index dropped rather sharply.
And as you indicated, this was before the,the '24 election, so this is a big deal.
That index did increase a little bit.

(07:53):
Now it's down- it's back down, belowwhat it was before the '24 election.
Yeah, and we are in April.
Do you see any room that situationcould change still in 2026?
It just depends on how longthis Iran conflict lasts.
I think if you did see somemitigation in the input cost,
that would help a little bit.
I, I just don't see anything changingprices, at least right now, that would

(08:16):
necessarily, cause it to increase.
But who knows?
I mean, there's a long time betweennow and, and harvest and- And if we
have drought and any, any, negativeimpact on supply, price could respond
and, and that certainly could change,the, the, the prospects, for buying,
machinery and buildings later this year.
Yeah.
Well, let's see.

(08:36):
Continue wa- watching.
And from time to time, the monthlysurvey includes questions about a
farm's competitive position and itsability to manage strategic risk.
This month's survey asked respondentshow strongly they agreed or disagreed

with the following statement (08:54):
We have low per unit fixed costs relative
to our most efficient competitors.
And, about 58% of the respondentsagreed with this statement, with 9%
indicating that they strongly agreed.
Michael, how the low per unitfixed costs help explain a farmer's

(09:17):
ability to manage strategic risk?
Well, when you talk about strategicrisk, you're talking about your
competitive position changing, and sowe wanted to ask a question related to
one of their major strategies, whichis probably being a low-cost producer.
Another major strategy isproduct differentiation,
adding value to your products.
But when we ask people, as we have inthe past, you know, what is their major

(09:40):
strategy, usually it's to be a low-costper- low, per unit cost producer, and so
that's where this question emanates from.
At first glance, I was a littlesurprised that there was that large
a group that thought their, theirper unit costs were relatively low.
Related to competitors.
But then I have to remind myselfis we only survey full-time farms.
Mm-hmm.
From an economies of scale standpoint,when you look at fixed costs, you would

(10:04):
expect, full-time farms to have lowerper unit costs than part-time farms.
And, but there, but, but, yeah, eventhough there was 57, 58% that agreed
with that statement, it's important topoint out that there's 40% that did not.
And so certainly if they're in that40%, this is the time to really, to,
to really bump up, their bench- theirbenchmarking efforts, bump up their, their

(10:27):
development of crop budgets, and reallytry to manage costs, you know, better than
they perhaps in, they have in the past.
Because, as we've said, margins are tight.
And they're particularly tight if,if, if you're not a low-cost producer.
And so this is something we always haveto, always have to keep our eye on.
Yeah, especially in commodity markets.
Yes.
We know that, to keep competitive, youshould keep your per unit cost very low.

(10:51):
And the Short-Term FarmlandValue Expectations Index also
decreased in April from 125 to 120-
One
One, just to be sure.
And the Long-Term Index declined aswell from 159 in March to 155 in April.

(11:11):
Alternative investments, interestrates, and inflation were mentioned
as the three factors having thebiggest influence on farmland values.
Michael, both index, increased inMarch and then moved lower in April.
What do you think explain that change?
I think th- these are very consistentwith the drops in the Index of

(11:32):
Current Conditions and the drop inthe Index of Future Expectations.
Usually, when you see, weaknessin, in both of those indices,
you see weakness in, in, bothshort-term and long-term values.
It is important to point out,particularly though with the Short-Term
Index, it's still quite a bithigher than what it was last summer.
And so that, that's interesting to me.

(11:53):
There's still a lot of... Thattells me there's still a lot of
confidence, in, in the land market.
You know, even with the tightmargins, there's a lot of confidence
in the land market, and that, that'swhy we ask that factors question.
We don't, we don't know if thosefactors are, are negative or positive.
I would think the net farm incomefactor is negative right now.
The interest rates is probably neutral.

(12:13):
Inflation is probably positive right now,and alternative investments is positive.
But that's why we ask that question,is, is why do they think that there's
gonna be, you know, stable or, or,or strong land values moving forward?
And that alternative investments, ithas been the largest factor every month
for the last- Yeah ... several months.
And so, and so at least the p- isthere perception, by the, by the

(12:34):
people we survey, that there'sstill a lot of interest from outside
investors in, in, in the land market.
Yeah, because actually landis a very strong asset- Yes.
Even though it's not for farmland-Yes ... or other business.
Yeah.
Yes.
So, and as in the last few months,farmers were asked in the survey
whether the things in the U.S. todayare generally headed in the right

(12:57):
direction or on the wrong track.
The percentage of producers whoindicated that the U.S. is headed
in the right direction decreasedfrom 65% in March to 57% in April.
Michael, this result is consistentwith the decline we saw across the
other indexes this month, right?

(13:18):
I wasn't sure it would bequite this large, but yeah,
it's definitely consistent.
And we didn't talk about farm growth,but we actually asked about farm
growth in this month's survey, andunlike previous times when we asked
about farm growth, there was a largerpercentage that were not gonna grow.
It was over 60%, that expect eitherno growth or expect to actually

(13:39):
decline, in the next five years.
And, when you look at those that h-that, that are looking at no growth,
they're particularly pessimisticabout the long-run environment.
Their p- their percentage, the percentageof those folks that say we're heading in
the right direction, is closer to 50%.
And so you've got a dichotomy here.
There's still some people that are fairlyoptimistic, in what I call the long-run

(14:00):
policy environment, which this questionwould reflect, but there seems to be a
growing group of people that are not.
And I think we also saw that insome of the comments, Joanna.
There's just more concerns about, aboutgeopolitical risk, about, about input
costs, a- and a lot of different things,that it makes that long, lo- the long-run

(14:20):
policy environment, you know, less clear.
We didn't touch it, but we also havethe result related to the exports- Yeah
... what they expect- Yeah ... in termsof exports will increase or decrease.
This year, actually, so far,we don't have the tariffs.
Yes.
So we should have a better year in termsof- Yes ... Chinese relationships, so.
Yeah, we will have to see, and perhapswe, we will add a question on exports

(14:43):
here to upcoming surveys to try tocapture- what the possible impact
of, of reduction in tariffs, will be.
Yeah.
So, and those are the keyhighlights from this month's survey.
Thank you so much, Michael.
You can find the full report onour website, and we will include
the link in the description below.
Thanks for watching, and be sure tolike, follow, and subscribe so you don't

(15:07):
miss, future reports and videos from thePurdue Center for Commercial Agriculture.
We will see you again next month.