July 1, 2025 • 21 mins
Farmer sentiment weakened in June as the Purdue University-CME Group Ag Economy Barometer fell to 146, down from 158 a month earlier. Purdue ag economists James Mintert and Michael Langemeier share their insight into the results of the June 2025 survey, conducted from June 9-13, in this episode of the Purdue Commercial AgCast. Key takeaways include a sharp decline in the Future Expectation Index, a stable Current Condition Index, a drop in the Farm Financial Performance Index, and a surprising rise in the Farm Capital Investment Index. The episode explores various factors impacting farmer sentiment, such as policy uncertainty, trade, tariffs, input costs, and labor issues.
The Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. Further details on the full report is available at https://purdue.edu/agbarometer. Slides and the transcript from the discussion can be found at https://purdue.ag/agcast189.
You can find the FULL video episode on our YouTube channel. Visit https://youtu.be/1C5-A2Z_vPg to subscribe and watch.
Podcast provided by Purdue University's Center for Commercial Agriculture. For more economic information and insights on the Ag Economy Barometer, visit us at http://purdue.edu/commercialag.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Welcome to Purdue Commercial AgCast atPurdue University Center for Commercial
Agriculture's podcast featuring farmmanagement news and information.
I'm your host today, James Mintert,Emeritus Professor of Agricultural
Economics at Purdue University.
And joining me today is mycolleague, Dr. Michael Langemeier,
who's director of the Center forCommercial Agriculture, and also a
professor of agricultural economics.
We're gonna review the results fromthe June 2025 Purdue University -CME
(00:28):
Group Ag Economy Barometer survey.
Each month we survey 400 farmersacross the U.S. to learn more about
their perspectives on the ag economy.
This month's ag barometersurvey was conducted from the
ninth through the 13th of June.
Michael, the barometer dipped this month.
It went from 158 in May to 146.
That's a 12 point dropin the month of June.
(00:50):
Um, but despite the decline, that stillleaves the barometer substantially
higher than it was this time last year.
It's up about 41 points compared towhere it was this time last year.
So keep that in mind whenyou think about the decline.
It was a significant decline, butstill way stronger than what we
were seeing last year at this time.
The Current Condition Index onlyfell two points to a reading of 144.
(01:12):
That still leaves that index 54 pointshigher than it was a year earlier.
And the Future Expectation Index diddrop pretty sharply, and that's what
drove the decline the barometer itself.
So the Future Expectation Indexwas down 18 points to 146.
Once again, though, that stillleaves that index 34 points higher
than it was in June of 2024.
(01:33):
So, Michael, before we started, youkind of mentioned that you were a
little bit surprised at these results.
Maybe you can kinda share that with us.
I'm not necessarily surprised thatthe, the barometer drop, like you
said, is still relatively strongcompared to last year and very strong
compared to last September and October.
Uh, and so that, that's not surprisingthat the barometer itself adjusted,
but what I was surprised that theIndex of Future Expectations fell
(01:56):
18 points to 146 and the, uh, Indexof Current Conditions only dropped
two, and they're very similar.
We have to go back quite a few monthsin order to see that a case where the
Index of Future Expectations is similar,uh, to the Index of Current Conditions.
We've been riding this wave here probablysince last August or so, where the Index
(02:18):
of Future Expectations was substantiallyabove the Index of Current Conditions.
And the Index of Current Conditions,uh, this is kind of an, an interesting
year when you think about netfarm income, to say the least.
Uh, we've got some positives.
We've got some negatives.
We've got some positive,particularly in the beef sector,
record prices, uh, recently.
Uh, and, and so there's some positivesin, in the beef sector and, and, and
(02:40):
the livestock sector in general, butthe crop sectors is, is having a tough,
another tough year, or at least it's,it's, uh, projected to have a tough year.
Uh, '24 was not particularly greatyear, uh, for crop producers, and it
looks like '25 is gonna be very similar.
And so that's what makes me a littlebit surprised that that Index of
Current Conditions is about the sameas that Index of Future Expectations.
(03:01):
So what do you think drove the declinein the Index of Future Expectations?
You know, is it, is it loss ofoptimism with respect to exports?
That's one of the thingswe've been talking about.
I think it's policy uncertainty.
I know that's kind of a cop out,if you will, but if you think about
it, we've still got some uncertaintyrelated to the Farm Bill, even though
as you said before the podcast,that does seem to be moving through,
(03:22):
uh, in a, in a reconciliation bill.
We've still got uncertaintythere and we've also got a lot of
uncertainty with trade and tariffs.
And so, uh, when you have anuncertain policy environment I
think that negatively impacts that,that, that Future Expectation Index.
Yeah, that's a good point.
So the Farm Financial Performanceindex did decline this month.
It was down five pointsto a reading of 104.
(03:43):
That still leaves that index 19 pointshigher than it was this time last year.
And again, the Farm FinancialPerformance Index decline, that kind
of correlates with what was goingon in that Current Condition Index.
The Farm Capital Investment Index,surprisingly rose five points to 60.
That nearly matches theApril reading of 61.
The percentage respondentssaying it's a good time to
(04:04):
invest this month rose to 24%.
That's up from 19% in May.
So Michael, you think about FarmFinancial Performance and the Capital
Investment Index, what's your take?
This Farm Capital Investment Index,as, as we, as we've said before, uh,
went up rather sharply last fall,and it's kind of remained there.
I mean, it, it was go, it was rightaround 30 to 40 for a long time, from
(04:26):
late '21 all the way, uh, to mid tomaybe going into the fall of '24.
And then all of a sudden, uh, it, itjumped, uh, to around 50, 50 to 60.
And, and, and so the reading of60 is very consistent in what
we've seen in the last few months.
Uh, what, what's exactly on, on anindividual's minds, I think that I
think, like you said, the fact thatIndex of Current Conditions is,
(04:47):
is relatively strong right now isprobably, is probably the same reason
why we're seeing this index slightlyhigher, uh, than what we saw last year.
I agree.
I think those two are highly correlatedat this point in terms of, uh, capital
investment being driven by perceptionsabout cap, uh, current conditions.
When you look at the responses to thequestions itself, the, that Capital
(05:08):
Investment Index is based on a questionthat says, thinking about large
farm investments like buildings andmachinery, do you think now is a good
time or a bad time to buy such items?
The thing that kind of stands outis twice as many respondents this
month said this was a good time toinvest as felt that way a year ago.
This month, 24% of the peoplein the survey said they think
it's a good time to invest.
(05:28):
A year ago that was only 12%.
Uh, the percentage sayingbad time has also fallen over
the course of the last year.
So there's that sentiment perspectiveabout this being a good time.
But then we've been asking a follow upquestion that says, what are your plans
for farm machinery purchases in theupcoming year compared to a year ago?
Despite the, uh, improvement, the CapitalInvestment Index, which is about the
(05:49):
sentiment about, uh, making investments.
When we ask people more specificallyabout farm machinery, the percentage
of people who say that they plan topull back and reduce their investment
or their expenditures on farmmachinery actually rose this month.
That was 54% of the people in thesurvey said they were gonna lower
their investments in farm machinery.
Last month, that was 48.
(06:10):
Alright, so put that whole packagetogether for me, Michael, and explain it.
That's very diff difficult to do.
Uh, the only thing I can think aboutwhat might be happening here is the, I I,
with Farm Capital Investment indexes up alittle bit, so they're a little bit more
optimistic that this might be a good time.
Maybe they're in, wait and see.
Uh, you know, particularly for cropproduction, you know, the, the crop
look fairly good across the Corn Belt.
(06:32):
Uh, there's always spots wherethey, where they don't look so
good, but we got a long ways to goyet, uh, w with this year's crop.
And, and we don't know what the pricesare going to be and we never do.
But there's, there, there's just as muchuncertainty this year as every year.
And so maybe they're ina wait and see attitude.
Let's see how, what this year lookslike before we actually, uh, uh, commit,
uh, to buying machinery and, and, uh,building, building more buildings.
(06:52):
Yeah, that's sort of my take as well.
We're, we're picking up this sentimentthat this could be a good time to make
some investments and that'll largely whenwe ask some other questions that largely
seems to relate to the fact that peoplethink that it's a good time to make a
deal because inventories are pretty largeand, and dealers might be more willing
to negotiate, um, but they're not willingto actually step out and, and write
a check, uh, and make that investmentdecision that, that commitment to invest.
(07:17):
Because one of the things that I didsome, I did some work recently using
the University of Minnesota FINBIN data.
And there's a very strong correlationbetween net cash farm income and, and
asset purchases, particularly machinery.
And so this year turns out to be agood year, uh, from net, net cash
farm income, uh, i.e. stronger thanI think it's going to be, than, than
we probably see more investment.
(07:38):
Yeah, that would be the big if, right?
That's the big if.
So the Short -Term Farmland ValueExpectation Index, which is based on a
question that says, what do you thinkis gonna happen to farmland values
in your area over the next 12 months.
That index did decline, but not muchdown four points compared to a month ago.
So that reading is at 120, that stillleaves the index five points higher
than it was this time last year.
(07:58):
If you go back two yearsago, it was at 126.
You really have to go backthree years before the index was
significantly stronger than what
we're seeing today.
And, you know, when I look at that one,
Michael, I kind of thinkit's expressing some cautious
optimism about farmland values.
If you look at the question thatthe actual responses to the question
that the index is based on, youcan kind of get a little bit of
(08:20):
a picture of what's going on.
The percentage of producers who said theyexpect values to rise fell from 37 to 32%.
The percentage of producers who expectvalues to hold steady rose from 50 to 56%.
So I think what we really saw is somepeople who maybe would've a month or so
ago said they thought value was gonnago up, have shifted over to saying,
(08:42):
well, I think it's gonna hold steady.
Yeah, this is a very interesting result.
And I think it's, I think it's tiedto everything we've been talking about
with that Index of Current Conditions,if you expect that Index of Current
Conditions to be relatively strong, iftheir sentiment's relatively strong with
regard to that, they're gonna be somewhatoptimistic when it comes to land values.
Yeah.
So we, we didn't pick up any realchange in the percentage of people who
(09:03):
say they think value's gonna go down.
It went to 12%.
So the, the move was really about a littleless confident that values are gonna
increase, I think they'll hold steady.
So maybe a little less optimisticthan we were a month ago.
So we mentioned trade earlier, andwe've been asking this question
since the beginning of 2019.
Uh, and that really helps us geta perspective on what people are
(09:23):
thinking about with respect to trade.
The question is, over the next fiveyears, do you think ag exports are
more likely to increase, decrease, orremain about the same and, you know, the
responses, these last couple of monthshave been pretty doggone volatile.
Uh, 41% of producers this month saidthey expect ag exports to increase.
That's down from 52% whofelt that way a month ago.
(09:46):
But you know, if you go back, uh,for example to to March, you really
could see some changes there.
So we saw one month bump in thepercentage of people who thought
exports were gonna increase.
That was in May.
We've backed off of that a little bit thismonth, but it's still an elevated level
compared to where we were previously.
And then when you look at the percentageof people who say they think exports
(10:07):
will actually decline, you know,you go back to March, 30% said they
thought exports were gonna decline.
This month it was only 16%.
So.
That probably explains someof that decline in future
expectations, do you think?
I, I think it contributes mightily.
Uh, you know, you never can sayit explains all of it, but, but
I think it goes a long ways inexplaining, explaining part of that
(10:27):
drop or a major part of that drop.
So, just for a little bit of perspective,and for listeners that haven't had
a chance to see the chart, you candownload this chart from our website,
but you can see this change inattitudes has taken place since 2019.
In 2019, a high percentage of respondentssaid they thought exports would
increase over the next five years.
Depending on the month, it wasbetween 50 and 70%, and most of
(10:50):
the time it was between 60 and 70%.
And then we'd have this multi-yeardecline in optimism about exports.
And now all of a sudden here, these lasttwo or three months, we've got volatility.
Are you surprised at the volatility?
No.
When there's that much uncertaintywith trade and tariffs,
you're gonna have volatility.
Yeah.
And that's what's really generating this.
So my guess is this will continue tobe volatile depending on most recent
(11:12):
announcements for the next few months.
So we asked, uh, a question back in2020 and we repeated that question
again here, these last two months.
And the question is, how strongly do youagree with the following statement, quote,
free trade benefits, agriculture, andmost other American industries, unquote.
(11:32):
And the results in 2025 versuswhat we received in 2020, and
we asked it three times in 2020.
We asked it in October,November, and December of 2020.
Now we've asked it herein May and June of 2025.
And there's a difference betweenthe way people feel about free
trade in 2025 versus 2020.
(11:53):
Um, support for free trade amongag producers has clearly waned.
From October to December, 2020, anaverage of 49% of the respondents to the
survey said they strongly agreed thatagriculture benefited from free trade.
In May and June of 2025, that percentagefell to an average of just 30%.
(12:14):
That's a significant drop.
It, it sure is.
And, and, uh, I. I don't evenknow what to say about this.
I mean, if we asked, we asked aeconomist the same question, uh,
those that would strongly agreewould be close to a hundred percent.
So, uh, uh, it is what it is.
But I think, I, I think all, allthe rhetoric related to trade and
tariffs is, is really, uh, has reallycaused some confusion, if you will,
(12:38):
or some uncertainty, uh, about therelative importance of free trade.
Yeah, historically agriculture has beena beneficiary of, of improvement in
trade, uh, terms and trade conditions.
So it is interesting to see thisturnaround and, and it, I, it speaks
to the idea that the administration hashit on a topic that, that many people
(12:58):
in agriculture are looking on favorably.
Another question we've been askingjust this year, we started this in
March of this year, what impact doyou expect the U.S. government's
imposition of tariffs on imports willhave on your farm's income in 2025?
Overall, there was less concern abouta negative impact on income in the
May and June surveys than we pickedup in the March and April survey.
(13:21):
So March and April, people weremore concerned that this could
have a negative impact on income.
There's still a lot of concernout there in May and June.
I don't wanna downplay that too much,but you can see a shift in the last
two months versus March and April.
We didn't ask, we didn't ask thisquestion this last, this last month,
but we have asked a question, uh,if we, if we do, uh, if we do have
(13:42):
trade issues, do you expect payments?
And, and overwhelmingly whenwe asked that question a a few
months ago, people said yes.
And so I think that's partof what's going on here.
Yeah.
And that's consistent what theadministration has said as well.
Yes.
So there's been goodreason to think that way.
So, um, so then the last question, andwe, this surprised some people, but We've
(14:03):
asked three times in a row now, and theresults have been pretty consistent, do
you expect the increased use of tariffsby the U.S. to strengthen or weaken
the U.S. ag economy in the long run?
So we asked it in April, we asked itin May, and now we've asked it in June.
And this month, 63% of thepeople in the survey said that
in the long run, they think it'llstrengthen the U.S. ag economy.
(14:26):
That's down a little bitcompared to April and May.
And April and May, it was 70%.
You know, if I combine those threeacross the board, Michael, I think you
wind up with about two thirds of thepeople in the survey, uh, across three
different surveys are telling us thatthey think in the long run, the increased
use of tariffs will actually strengthenthe U.S. ag economy in the long run.
(14:47):
Yeah, I, I'm not gonna make a big dealout of the 7% drop from May to June.
I mean, that is a drop.
Uh, but, but like you said, I mean,when you, you know, we average across
those two thirds of the people,uh, think this is gonna strengthen,
uh, the U.S. agriculture economy.
And, and even though the Indexof Future Expectations did drop,
it's still relatively high.
And I think this question right hereexplains why it's relatively high.
(15:09):
Yeah, it's, uh, it's, it's aninteresting result and it's one that,
you know, we talk to a lot of ageconomists and I don't know of any ag
economists who actually agree with this.
There probably is somebodysomewhere, but I haven't run
across that person or that faculty.
At best, they'd be inthe uncertain category.
Yeah.
So, uh, clearly, you know, if you thinkabout what's going on here, I think
what people expect that are respondingthis way, I think that agriculture has
(15:33):
been disadvantaged by various tariffbarriers and, and in some cases non-
tariff barriers that have impeded trade.
And they're expecting thesepolicies to lead to, um, alleviation
of those barriers, right?
Yes.
I I think that's what's driving this.
Yeah, I think so too.
From my own perspective, there may beoverestimating how much impact those
barriers have had, but in some cases,and in some countries and in some
(15:55):
commodities, it has been significant.
So it's an interesting result.
We're gonna continue to askthis question going forward.
Um, looking ahead to next year,what are your biggest concerns
for your farming operation?
You know, we've been asking thisquestion now for, uh, what two years.
I don't have the full, uh, chart on the,uh, in front of me at the moment, but
long time and it really hasn't changed.
(16:18):
Higher input cost.
Right.
And I still think that's related to thefact that for a lot of folks, the anchor
point for input cost is really pre COVID.
And we've seen such a dramatic runupin so many production costs since then.
Especially things like farm machinery,um, and some of the other inputs
as well, but especially machinery.
(16:38):
That continues to be what people focus on.
Lower crop and livestockprices is number two.
It's at 28% this month.
That is up compared to last month,and I think the highest reading we've
received for that, uh, category this year.
Uh, but.
I keep waiting for the lower cropin livestock prices to be a bigger
(16:59):
worry than high input costs, butit just doesn't seem to happen.
I, I think it's probably not gonna happenfor a while as long as we have at least
25% that are livestock producers in there.
I mean, they're not really facinglow, low, low prices right now.
So I think that's partof what's going on here.
But if you think about, ifyou think about the, the, the,
the tight margins right now.
Uh, you can, you can attributea lot of the tight margins to
(17:21):
relatively high breakeven prices.
Uh, yes, corn and soybean prices are notgood, but compared to 2014- 2019 period,
they're still not as bad as that period.
And so I, I think I. I think highinput costs are really on people's
minds, and so I, I'm not surprisedthat this has been stubbornly, uh,
between 35 and 40% for a long time.
(17:43):
We started asking a que a, a questionsimilar to this coming outta COVID,
and it's been very consistent eversince we, ever since we started
asking this question that they'reworried about these high input costs.
Yeah, that's a good point.
If you just look at a price chart,current prices don't look that bad
from a historical perspective, butthe problem is it costs so much to
actually produce whether, whatevercommodity you're looking at.
Right.
(18:03):
We asked this question last month.
We've repeated it again this month.
Do you normally hire non-familymembers to work in your farm operation?
Uh, last month, 51% of the peoplein the survey said yes, they did.
This month it was 56%, so a few more.
Uh, people said they hire non-familymembers, uh, to work on their farm
than, than we picked up last month.
Then the follow up question that wentto people who said that they did hire
(18:26):
non-family members to work on their farm.
We asked them, do you, are youhaving, or do you expect to have
difficulty hiring adequate labor in2025 for your farm operation as a
result of the U.S. administration'spolicy to reduce immigration.
And, you know.
Yeah.
Two different ways of looking at it.
Um, about 20%, so one out of fiveof the people who say that they
(18:48):
hire non-family members to work for'em, say they're having either a lot
of difficulty or some difficulty.
80% say at least so far, no difficulty.
And those results aren't toomuch different than last month.
I think, um, it was right around79 or 80% of the people who last
month who said no difficulty.
Given.
So, which, which of those twobuckets do you wanna focus on?
(19:10):
Given who we sample, uh, we havedairy and swine producers in there.
That's the two that cometo my mind right away.
As, as, as, as producers that probablyhave quite a bit of hired labor.
Uh, that, that we survey.
But we don't have vegetable producers.
We don't have specialty crop producers.
Uh, and, and so, and so a lot of the, the,a lot of agriculture that has a lot of
hired labor are not part of this survey.
(19:32):
And so the reason why I, I, I startwith that is the fact that one out
of five have some difficulty ora lot of difficulty is a problem.
For this group of farms.
Yeah, that, I think that'sa good way to look at it.
And that's kind of my perspective as well.
And so for listeners just toknow, so you know a little more
about how we do the survey.
The survey targets people who areproducers of the major ag commodities.
(19:53):
And on the crop side, uh, that'scorn and soybeans, wheat and cotton.
And on the livestock side it'sbeef, uh, dairy and swine.
And we do wind up with a fewpeople in there who probably
do produce specialty crops.
But the reason they're in the survey isbecause they have the, one of the other
They don't focus on that necessary.
Yeah.
They have one of the other enterprises.
So we don't, we do notintentionally survey people who
(20:14):
are specialty crop producers.
Um, and we do have, as you mentioned,the dairy and swine producers in
there, but they might, uh, let's see,dairy and swine would make up, uh.
7-8%.
Yeah.
Less than 10% survey.
It's a relatively small percent.
Yeah.
Yeah.
That wraps up the highlightsof this month's survey.
You can get the full report on ourwebsite: purdue.edu/agbarometer.
(20:36):
And of course, you can always listento the Purdue Commercial AgCast for
not only the Ag economy barometerupdates, but a variety of other
farm management and news topics.
So with that, I want to thank mycolleague, Dr. Michael Langemeier for
joining me on the broadcast today.
And on behalf of the Center forCommercial Agriculture, I'm Jim Mintert.
Welcome to Purdue Commercial AgCast atPurdue University Center for Commercial
Agriculture's podcast featuring farmmanagement news and information.
I'm your host today, James Mintert,Emeritus Professor of Agricultural
Economics at Purdue University.
And joining me today is mycolleague, Dr. Michael Langemeier,
who's director of the Center forCommercial Agriculture, and also a
professor of agricultural economics.
We're gonna review the results fromthe June 2025 Purdue University -CME
(00:28):
Group Ag Economy Barometer survey.
Each month we survey 400 farmersacross the U.S. to learn more about
their perspectives on the ag economy.
This month's ag barometersurvey was conducted from the
ninth through the 13th of June.
Michael, the barometer dipped this month.
It went from 158 in May to 146.
That's a 12 point dropin the month of June.
(00:50):
Um, but despite the decline, that stillleaves the barometer substantially
higher than it was this time last year.
It's up about 41 points compared towhere it was this time last year.
So keep that in mind whenyou think about the decline.
It was a significant decline, butstill way stronger than what we
were seeing last year at this time.
The Current Condition Index onlyfell two points to a reading of 144.
(01:12):
That still leaves that index 54 pointshigher than it was a year earlier.
And the Future Expectation Index diddrop pretty sharply, and that's what
drove the decline the barometer itself.
So the Future Expectation Indexwas down 18 points to 146.
Once again, though, that stillleaves that index 34 points higher
than it was in June of 2024.
(01:33):
So, Michael, before we started, youkind of mentioned that you were a
little bit surprised at these results.
Maybe you can kinda share that with us.
I'm not necessarily surprised thatthe, the barometer drop, like you
said, is still relatively strongcompared to last year and very strong
compared to last September and October.
Uh, and so that, that's not surprisingthat the barometer itself adjusted,
but what I was surprised that theIndex of Future Expectations fell
(01:56):
18 points to 146 and the, uh, Indexof Current Conditions only dropped
two, and they're very similar.
We have to go back quite a few monthsin order to see that a case where the
Index of Future Expectations is similar,uh, to the Index of Current Conditions.
We've been riding this wave here probablysince last August or so, where the Index
(02:18):
of Future Expectations was substantiallyabove the Index of Current Conditions.
And the Index of Current Conditions,uh, this is kind of an, an interesting
year when you think about netfarm income, to say the least.
Uh, we've got some positives.
We've got some negatives.
We've got some positive,particularly in the beef sector,
record prices, uh, recently.
Uh, and, and so there's some positivesin, in the beef sector and, and, and
(02:40):
the livestock sector in general, butthe crop sectors is, is having a tough,
another tough year, or at least it's,it's, uh, projected to have a tough year.
Uh, '24 was not particularly greatyear, uh, for crop producers, and it
looks like '25 is gonna be very similar.
And so that's what makes me a littlebit surprised that that Index of
Current Conditions is about the sameas that Index of Future Expectations.
(03:01):
So what do you think drove the declinein the Index of Future Expectations?
You know, is it, is it loss ofoptimism with respect to exports?
That's one of the thingswe've been talking about.
I think it's policy uncertainty.
I know that's kind of a cop out,if you will, but if you think about
it, we've still got some uncertaintyrelated to the Farm Bill, even though
as you said before the podcast,that does seem to be moving through,
(03:22):
uh, in a, in a reconciliation bill.
We've still got uncertaintythere and we've also got a lot of
uncertainty with trade and tariffs.
And so, uh, when you have anuncertain policy environment I
think that negatively impacts that,that, that Future Expectation Index.
Yeah, that's a good point.
So the Farm Financial Performanceindex did decline this month.
It was down five pointsto a reading of 104.
(03:43):
That still leaves that index 19 pointshigher than it was this time last year.
And again, the Farm FinancialPerformance Index decline, that kind
of correlates with what was goingon in that Current Condition Index.
The Farm Capital Investment Index,surprisingly rose five points to 60.
That nearly matches theApril reading of 61.
The percentage respondentssaying it's a good time to
(04:04):
invest this month rose to 24%.
That's up from 19% in May.
So Michael, you think about FarmFinancial Performance and the Capital
Investment Index, what's your take?
This Farm Capital Investment Index,as, as we, as we've said before, uh,
went up rather sharply last fall,and it's kind of remained there.
I mean, it, it was go, it was rightaround 30 to 40 for a long time, from
(04:26):
late '21 all the way, uh, to mid tomaybe going into the fall of '24.
And then all of a sudden, uh, it, itjumped, uh, to around 50, 50 to 60.
And, and, and so the reading of60 is very consistent in what
we've seen in the last few months.
Uh, what, what's exactly on, on anindividual's minds, I think that I
think, like you said, the fact thatIndex of Current Conditions is,
(04:47):
is relatively strong right now isprobably, is probably the same reason
why we're seeing this index slightlyhigher, uh, than what we saw last year.
I agree.
I think those two are highly correlatedat this point in terms of, uh, capital
investment being driven by perceptionsabout cap, uh, current conditions.
When you look at the responses to thequestions itself, the, that Capital
(05:08):
Investment Index is based on a questionthat says, thinking about large
farm investments like buildings andmachinery, do you think now is a good
time or a bad time to buy such items?
The thing that kind of stands outis twice as many respondents this
month said this was a good time toinvest as felt that way a year ago.
This month, 24% of the peoplein the survey said they think
it's a good time to invest.
(05:28):
A year ago that was only 12%.
Uh, the percentage sayingbad time has also fallen over
the course of the last year.
So there's that sentiment perspectiveabout this being a good time.
But then we've been asking a follow upquestion that says, what are your plans
for farm machinery purchases in theupcoming year compared to a year ago?
Despite the, uh, improvement, the CapitalInvestment Index, which is about the
(05:49):
sentiment about, uh, making investments.
When we ask people more specificallyabout farm machinery, the percentage
of people who say that they plan topull back and reduce their investment
or their expenditures on farmmachinery actually rose this month.
That was 54% of the people in thesurvey said they were gonna lower
their investments in farm machinery.
Last month, that was 48.
(06:10):
Alright, so put that whole packagetogether for me, Michael, and explain it.
That's very diff difficult to do.
Uh, the only thing I can think aboutwhat might be happening here is the, I I,
with Farm Capital Investment indexes up alittle bit, so they're a little bit more
optimistic that this might be a good time.
Maybe they're in, wait and see.
Uh, you know, particularly for cropproduction, you know, the, the crop
look fairly good across the Corn Belt.
(06:32):
Uh, there's always spots wherethey, where they don't look so
good, but we got a long ways to goyet, uh, w with this year's crop.
And, and we don't know what the pricesare going to be and we never do.
But there's, there, there's just as muchuncertainty this year as every year.
And so maybe they're ina wait and see attitude.
Let's see how, what this year lookslike before we actually, uh, uh, commit,
uh, to buying machinery and, and, uh,building, building more buildings.
(06:52):
Yeah, that's sort of my take as well.
We're, we're picking up this sentimentthat this could be a good time to make
some investments and that'll largely whenwe ask some other questions that largely
seems to relate to the fact that peoplethink that it's a good time to make a
deal because inventories are pretty largeand, and dealers might be more willing
to negotiate, um, but they're not willingto actually step out and, and write
a check, uh, and make that investmentdecision that, that commitment to invest.
(07:17):
Because one of the things that I didsome, I did some work recently using
the University of Minnesota FINBIN data.
And there's a very strong correlationbetween net cash farm income and, and
asset purchases, particularly machinery.
And so this year turns out to be agood year, uh, from net, net cash
farm income, uh, i.e. stronger thanI think it's going to be, than, than
we probably see more investment.
(07:38):
Yeah, that would be the big if, right?
That's the big if.
So the Short -Term Farmland ValueExpectation Index, which is based on a
question that says, what do you thinkis gonna happen to farmland values
in your area over the next 12 months.
That index did decline, but not muchdown four points compared to a month ago.
So that reading is at 120, that stillleaves the index five points higher
than it was this time last year.
(07:58):
If you go back two yearsago, it was at 126.
You really have to go backthree years before the index was
significantly stronger than what
we're seeing today.
And, you know, when I look at that one,
Michael, I kind of thinkit's expressing some cautious
optimism about farmland values.
If you look at the question thatthe actual responses to the question
that the index is based on, youcan kind of get a little bit of
(08:20):
a picture of what's going on.
The percentage of producers who said theyexpect values to rise fell from 37 to 32%.
The percentage of producers who expectvalues to hold steady rose from 50 to 56%.
So I think what we really saw is somepeople who maybe would've a month or so
ago said they thought value was gonnago up, have shifted over to saying,
(08:42):
well, I think it's gonna hold steady.
Yeah, this is a very interesting result.
And I think it's, I think it's tiedto everything we've been talking about
with that Index of Current Conditions,if you expect that Index of Current
Conditions to be relatively strong, iftheir sentiment's relatively strong with
regard to that, they're gonna be somewhatoptimistic when it comes to land values.
Yeah.
So we, we didn't pick up any realchange in the percentage of people who
(09:03):
say they think value's gonna go down.
It went to 12%.
So the, the move was really about a littleless confident that values are gonna
increase, I think they'll hold steady.
So maybe a little less optimisticthan we were a month ago.
So we mentioned trade earlier, andwe've been asking this question
since the beginning of 2019.
Uh, and that really helps us geta perspective on what people are
(09:23):
thinking about with respect to trade.
The question is, over the next fiveyears, do you think ag exports are
more likely to increase, decrease, orremain about the same and, you know, the
responses, these last couple of monthshave been pretty doggone volatile.
Uh, 41% of producers this month saidthey expect ag exports to increase.
That's down from 52% whofelt that way a month ago.
(09:46):
But you know, if you go back, uh,for example to to March, you really
could see some changes there.
So we saw one month bump in thepercentage of people who thought
exports were gonna increase.
That was in May.
We've backed off of that a little bit thismonth, but it's still an elevated level
compared to where we were previously.
And then when you look at the percentageof people who say they think exports
(10:07):
will actually decline, you know,you go back to March, 30% said they
thought exports were gonna decline.
This month it was only 16%.
So.
That probably explains someof that decline in future
expectations, do you think?
I, I think it contributes mightily.
Uh, you know, you never can sayit explains all of it, but, but
I think it goes a long ways inexplaining, explaining part of that
(10:27):
drop or a major part of that drop.
So, just for a little bit of perspective,and for listeners that haven't had
a chance to see the chart, you candownload this chart from our website,
but you can see this change inattitudes has taken place since 2019.
In 2019, a high percentage of respondentssaid they thought exports would
increase over the next five years.
Depending on the month, it wasbetween 50 and 70%, and most of
(10:50):
the time it was between 60 and 70%.
And then we'd have this multi-yeardecline in optimism about exports.
And now all of a sudden here, these lasttwo or three months, we've got volatility.
Are you surprised at the volatility?
No.
When there's that much uncertaintywith trade and tariffs,
you're gonna have volatility.
Yeah.
And that's what's really generating this.
So my guess is this will continue tobe volatile depending on most recent
(11:12):
announcements for the next few months.
So we asked, uh, a question back in2020 and we repeated that question
again here, these last two months.
And the question is, how strongly do youagree with the following statement, quote,
free trade benefits, agriculture, andmost other American industries, unquote.
(11:32):
And the results in 2025 versuswhat we received in 2020, and
we asked it three times in 2020.
We asked it in October,November, and December of 2020.
Now we've asked it herein May and June of 2025.
And there's a difference betweenthe way people feel about free
trade in 2025 versus 2020.
(11:53):
Um, support for free trade amongag producers has clearly waned.
From October to December, 2020, anaverage of 49% of the respondents to the
survey said they strongly agreed thatagriculture benefited from free trade.
In May and June of 2025, that percentagefell to an average of just 30%.
(12:14):
That's a significant drop.
It, it sure is.
And, and, uh, I. I don't evenknow what to say about this.
I mean, if we asked, we asked aeconomist the same question, uh,
those that would strongly agreewould be close to a hundred percent.
So, uh, uh, it is what it is.
But I think, I, I think all, allthe rhetoric related to trade and
tariffs is, is really, uh, has reallycaused some confusion, if you will,
(12:38):
or some uncertainty, uh, about therelative importance of free trade.
Yeah, historically agriculture has beena beneficiary of, of improvement in
trade, uh, terms and trade conditions.
So it is interesting to see thisturnaround and, and it, I, it speaks
to the idea that the administration hashit on a topic that, that many people
(12:58):
in agriculture are looking on favorably.
Another question we've been askingjust this year, we started this in
March of this year, what impact doyou expect the U.S. government's
imposition of tariffs on imports willhave on your farm's income in 2025?
Overall, there was less concern abouta negative impact on income in the
May and June surveys than we pickedup in the March and April survey.
(13:21):
So March and April, people weremore concerned that this could
have a negative impact on income.
There's still a lot of concernout there in May and June.
I don't wanna downplay that too much,but you can see a shift in the last
two months versus March and April.
We didn't ask, we didn't ask thisquestion this last, this last month,
but we have asked a question, uh,if we, if we do, uh, if we do have
(13:42):
trade issues, do you expect payments?
And, and overwhelmingly whenwe asked that question a a few
months ago, people said yes.
And so I think that's partof what's going on here.
Yeah.
And that's consistent what theadministration has said as well.
Yes.
So there's been goodreason to think that way.
So, um, so then the last question, andwe, this surprised some people, but We've
(14:03):
asked three times in a row now, and theresults have been pretty consistent, do
you expect the increased use of tariffsby the U.S. to strengthen or weaken
the U.S. ag economy in the long run?
So we asked it in April, we asked itin May, and now we've asked it in June.
And this month, 63% of thepeople in the survey said that
in the long run, they think it'llstrengthen the U.S. ag economy.
(14:26):
That's down a little bitcompared to April and May.
And April and May, it was 70%.
You know, if I combine those threeacross the board, Michael, I think you
wind up with about two thirds of thepeople in the survey, uh, across three
different surveys are telling us thatthey think in the long run, the increased
use of tariffs will actually strengthenthe U.S. ag economy in the long run.
(14:47):
Yeah, I, I'm not gonna make a big dealout of the 7% drop from May to June.
I mean, that is a drop.
Uh, but, but like you said, I mean,when you, you know, we average across
those two thirds of the people,uh, think this is gonna strengthen,
uh, the U.S. agriculture economy.
And, and even though the Indexof Future Expectations did drop,
it's still relatively high.
And I think this question right hereexplains why it's relatively high.
(15:09):
Yeah, it's, uh, it's, it's aninteresting result and it's one that,
you know, we talk to a lot of ageconomists and I don't know of any ag
economists who actually agree with this.
There probably is somebodysomewhere, but I haven't run
across that person or that faculty.
At best, they'd be inthe uncertain category.
Yeah.
So, uh, clearly, you know, if you thinkabout what's going on here, I think
what people expect that are respondingthis way, I think that agriculture has
(15:33):
been disadvantaged by various tariffbarriers and, and in some cases non-
tariff barriers that have impeded trade.
And they're expecting thesepolicies to lead to, um, alleviation
of those barriers, right?
Yes.
I I think that's what's driving this.
Yeah, I think so too.
From my own perspective, there may beoverestimating how much impact those
barriers have had, but in some cases,and in some countries and in some
(15:55):
commodities, it has been significant.
So it's an interesting result.
We're gonna continue to askthis question going forward.
Um, looking ahead to next year,what are your biggest concerns
for your farming operation?
You know, we've been asking thisquestion now for, uh, what two years.
I don't have the full, uh, chart on the,uh, in front of me at the moment, but
long time and it really hasn't changed.
(16:18):
Higher input cost.
Right.
And I still think that's related to thefact that for a lot of folks, the anchor
point for input cost is really pre COVID.
And we've seen such a dramatic runupin so many production costs since then.
Especially things like farm machinery,um, and some of the other inputs
as well, but especially machinery.
(16:38):
That continues to be what people focus on.
Lower crop and livestockprices is number two.
It's at 28% this month.
That is up compared to last month,and I think the highest reading we've
received for that, uh, category this year.
Uh, but.
I keep waiting for the lower cropin livestock prices to be a bigger
(16:59):
worry than high input costs, butit just doesn't seem to happen.
I, I think it's probably not gonna happenfor a while as long as we have at least
25% that are livestock producers in there.
I mean, they're not really facinglow, low, low prices right now.
So I think that's partof what's going on here.
But if you think about, ifyou think about the, the, the,
the tight margins right now.
Uh, you can, you can attributea lot of the tight margins to
(17:21):
relatively high breakeven prices.
Uh, yes, corn and soybean prices are notgood, but compared to 2014- 2019 period,
they're still not as bad as that period.
And so I, I think I. I think highinput costs are really on people's
minds, and so I, I'm not surprisedthat this has been stubbornly, uh,
between 35 and 40% for a long time.
(17:43):
We started asking a que a, a questionsimilar to this coming outta COVID,
and it's been very consistent eversince we, ever since we started
asking this question that they'reworried about these high input costs.
Yeah, that's a good point.
If you just look at a price chart,current prices don't look that bad
from a historical perspective, butthe problem is it costs so much to
actually produce whether, whatevercommodity you're looking at.
Right.
(18:03):
We asked this question last month.
We've repeated it again this month.
Do you normally hire non-familymembers to work in your farm operation?
Uh, last month, 51% of the peoplein the survey said yes, they did.
This month it was 56%, so a few more.
Uh, people said they hire non-familymembers, uh, to work on their farm
than, than we picked up last month.
Then the follow up question that wentto people who said that they did hire
(18:26):
non-family members to work on their farm.
We asked them, do you, are youhaving, or do you expect to have
difficulty hiring adequate labor in2025 for your farm operation as a
result of the U.S. administration'spolicy to reduce immigration.
And, you know.
Yeah.
Two different ways of looking at it.
Um, about 20%, so one out of fiveof the people who say that they
(18:48):
hire non-family members to work for'em, say they're having either a lot
of difficulty or some difficulty.
80% say at least so far, no difficulty.
And those results aren't toomuch different than last month.
I think, um, it was right around79 or 80% of the people who last
month who said no difficulty.
Given.
So, which, which of those twobuckets do you wanna focus on?
(19:10):
Given who we sample, uh, we havedairy and swine producers in there.
That's the two that cometo my mind right away.
As, as, as, as producers that probablyhave quite a bit of hired labor.
Uh, that, that we survey.
But we don't have vegetable producers.
We don't have specialty crop producers.
Uh, and, and so, and so a lot of the, the,a lot of agriculture that has a lot of
hired labor are not part of this survey.
(19:32):
And so the reason why I, I, I startwith that is the fact that one out
of five have some difficulty ora lot of difficulty is a problem.
For this group of farms.
Yeah, that, I think that'sa good way to look at it.
And that's kind of my perspective as well.
And so for listeners just toknow, so you know a little more
about how we do the survey.
The survey targets people who areproducers of the major ag commodities.
(19:53):
And on the crop side, uh, that'scorn and soybeans, wheat and cotton.
And on the livestock side it'sbeef, uh, dairy and swine.
And we do wind up with a fewpeople in there who probably
do produce specialty crops.
But the reason they're in the survey isbecause they have the, one of the other
They don't focus on that necessary.
Yeah.
They have one of the other enterprises.
So we don't, we do notintentionally survey people who
(20:14):
are specialty crop producers.
Um, and we do have, as you mentioned,the dairy and swine producers in
there, but they might, uh, let's see,dairy and swine would make up, uh.
7-8%.
Yeah.
Less than 10% survey.
It's a relatively small percent.
Yeah.
Yeah.
That wraps up the highlightsof this month's survey.
You can get the full report on ourwebsite: purdue.edu/agbarometer.
(20:36):
And of course, you can always listento the Purdue Commercial AgCast for
not only the Ag economy barometerupdates, but a variety of other
farm management and news topics.
So with that, I want to thank mycolleague, Dr. Michael Langemeier for
joining me on the broadcast today.
And on behalf of the Center forCommercial Agriculture, I'm Jim Mintert.
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