June 3, 2025 • 23 mins
Farmer sentiment reached a four-year high in May. Purdue ag economists James Mintert and Michael Langemeier share their insight into the results of the May 2025 Purdue University-CME Group Ag Economy Barometer survey, conducted from May 12-16, in this episode of the Purdue Commercial AgCast. The barometer rose 10 points to 158, the highest since May 2021, driven by optimism about future and current farm conditions. The Farm Financial Performance Index also saw an increase, while the Farm Capital Investment Index declined slightly. Other key points include a surprising jump in the Short-Term Farmland Value Expectation Index, shifting attitudes toward ag exports, and concerns about labor impacts due to U.S. immigration policies. Current farmer concerns remain centered on high input costs and interest rates, and there is notable interest in the passage of a new 2025 farm bill.
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/agcast188.
You can find the FULL video episode on our YouTube channel. Visit https://youtu.be/GRm0BZYXeR0 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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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Welcome to Purdue Commercial AgCast thePurdue University Center for Commercial
Agriculture's podcast featuring farmmanagement news and information.
I'm your host, James Mintert,Emeritus Professor of agricultural
economics at Purdue University.
And joining me today is my colleague, Dr.Michael Langemeier, director of the Center
for Commercial Agriculture, and also aprofessor of Ag Economics here at Purdue.
We're gonna review the results fromthe May, 2025 Purdue University-CME
(00:23):
Group Ag Economy Barometer surveyof farmers from across the nation.
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
12th through the 16th of May.
(00:45):
And Michael, the barometer rose10 points this month to 158.
That's the highest barometer readingwe've gotten since May of 2021 and
continues the, the trend we've had ofstrong barometer readings ever since
the election last fall, and, and to someextent, maybe dating back to October.
The Current Condition Indexrose five points to 146.
(01:06):
That's the highest Current ConditionIndex since December of 2021.
And of course, the the biggest movewas in the Future Expectation Index.
It was up 12 points to 164.
That's the highest Future ExpectationsIndex since April of 2021.
So the biggest reason the barometerwent up was because people became more
optimistic about the future, but theyalso became a little more optimistic
(01:29):
about the current situation on theirfarms and, and in the U.S. ag economy.
I wasn't surprised thatthe barometer went up.
But maybe the magnitude of thejump was a little bit surprising.
Yeah, I'm in the same camp.
I wasn't surprised it went up.
During the week we were asking this,there was some good news regarding
tariffs with respect to China.
(01:49):
I don't exact exactly whatthe timing was there, but it
certainly was during that week.
And so I think that played into the,to the optimism, uh, we, we saw in, in
this month's, uh, this month's reading.
I'm still surprised, however,that the Index of Current
Conditions is as strong as it is.
That also went up five points.
Um, so that was, that wasa little surprising to me.
(02:09):
Yeah, that's sort of my take and, andagain, this administration continues
to have these short term, um, delaysin implementation of, of tariffs.
And that seems to give us this bouncein terms of expectations, not just in
our index, but also in in other indexes.
Right.
You see it in the stock market, elsewhere.
So you get these very short runresponses and I think we definitely
(02:31):
picked up some of that this month.
Um, the Farm Financial PerformanceIndex was up eight points to 109.
That's just two points lowerthan it was back in January.
And again, it's the highest indexreading since December of 2022.
And you know, when you look atthe chart, you can really see
how that change has taken place.
Going back to last fall, you goback to September, that index
(02:52):
was at 68 and now we're at 109.
So we've really seen thisdramatic improvement in that
Farm financial performance Index.
Some of that relates to 2025expectations versus 2024 versus,
you know, last fall people werecomparing 2024 to 2023, I think.
But still, um, I don't know, alittle, a little optimistic, isn't it?
(03:15):
I, I think so.
But, but, but I do think '25is gonna be as good as '24.
And so, and so when you, when I look at,when I look at, uh, budget projections,
for example, I, I think it's fairlyconsistent with the budget projections.
Okay.
Uh, and you've said that before.
I, I guess, um, I, I, well, overall, Ijust continue to be a little surprised
(03:36):
at the optimism we're picking up.
It doesn't necessarily mean thisis gonna be a good year, but it,
what that tells me is they thinkit's gonna be similar to '24.
Yeah.
And, and I would agree with that.
And that's how the question is phrased.
So that's, that's a good point.
Uh, the Farm Capital InvestmentIndex did fall this month.
It fell six points.
But that was still pretty strongrelative to the last three years.
You go back this timelast year, we were at 35.
(03:56):
2 years ago, we were at 37.
Three years ago we were at 35.
You really have to go back fouryears to see the kind of values that
we're seeing on this index right now.
Um, in fact, going back to 2021,you'd have to find a May reading
higher than this year's reading.
So, um.
The fact that it fell a littlebit isn't too surprising to me.
(04:17):
I guess the key point is it's stillabove what I consider to be the trading
range that the upper bend of thattrading range for the better part
of three, three and a half years wasabout 50, and we're still above that.
So I guess I don't see a big change there.
What, what's your take, Michael?
Yeah, I don't either.
I mean, I, you know, this, this thing,this thing does a little seesawing.
Back and forth, but again, thesurprise is that it's as high as it is.
(04:39):
When you look underneath tofigure out why the index changed.
The percentage reporting good time tomake large investments fell from 25
to 19%, while the percentage reportingbad times was unchanged to 64%.
So that's what caused the index to move.
You did see a little loss of optimismabout this being a good time.
I dunno, maybe a little bit surprisinggiven the bump we saw in future
(05:02):
expectations, uh, those two, maybeI would've expected to see a little
stronger correlation, but stillthat's, that's what took place there.
Um, the interesting thing is if you lookat the last several months and look at
the question that says, what are yourplans for farmer senior purchases in the
upcoming year compared to a year ago?
There has been a little bit of a driftthere and going back to February the
(05:25):
percentage of people who expect to reducetheir farmer stream purchases in the
current or in the upcoming year comparedto a year ago, has been drifting lower.
Back in February it was 54% we'regonna pull back, uh, been drifting
lower the last couple of months.
This month it was at 48%.
The percentage saying that they're gonnahold their investments about the same has
climbed from about 36% back in February,uh, to 43% these last two months.
(05:51):
So in a way I think that's a little bitconsistent with the strength we've seen in
the Capital Investment Index, don't you?
Yes.
I, I do think, I dothink that's consistent.
And, and the, the May, the may numberswere very similar to the January numbers.
I, I, I found that rather curious.
But, but they were, I. And so it,it looks like we are a little more
negative in February, March and April.
(06:12):
And now they're just a little bit morepositive, uh, you know, consistent
with where they were at in January.
So it remains to be seen ifthat's gonna have any impact
on things like tractor sales.
So far, certainly in the first quarterthis year that didn't, was not the case.
Um, longer term it'd be interestingto see what, what takes place there
and whether or not there may be isa little bit of moderation there.
(06:33):
Um, if there's one number on thesurvey this month that surprised me
the most, it's probably this one,Michael, and that is the Short-Term
Farmland Value Expectation Index.
It jumped 14 points to a reading of 124.
Um, that's the highest indexfor that since a little over
a year ago, March of 2024.
And, you know, I, I'm just kind ofsurprised that people's expectations
(06:58):
for farmland values would changethat much in one month given the news
that we had and, and what took place.
How about you?
Yeah, usually this is very consistentwith the Index of current Conditions.
It was up slightly, so I would,I would've expected this to be up
slightly, but not as much as it was.
I mean, that's a big jump.
Yeah, and if you look at the question thatthat index is based on, which is basically
(07:20):
asking people about their farmland priceexpectations for the next 12 months.
The percentage of producers who expecthigher farmland values this month jumped
from 25% in April to 37% this month.
Um, and that shift occurred from, withpeople moving away from the, uh, expecting
values to hold steady category intothat, uh, expecting values to increase.
(07:44):
Uh, the percentage of peopleexpecting values to hold
steady dropped from 60 to 50%.
So it's not like people flippedfrom negative to positive, they
flipped from percentage holdingsteady to becoming more optimistic.
So I guess maybe in that context it's alittle more understandable, but still.
A pretty big jump.
Uh,
Yeah, really big jump.
(08:05):
Um, we've been asking this question allthe way back to 2019, and we've talked
about it not every single month, butperiodically here about the lack of
optimism people have about ag exports.
So the question is, over the nextfive years, do you think ag exports
are more likely to increase,decrease, and remain about the same?
And for some time, people havein over time become less and less
(08:27):
optimistic about exports increasing.
That changed this month big time.
Uh, the percentage of people who saythey expect exports to increase over
the next five years in May jumped to52% up from just 33% a month earlier.
That's the highest percentageexpecting exports to increase
(08:49):
since November of 2020.
This was a truly amazing result.
I did not expect this.
I expected to be a little bitmore positive, but not this much.
And just, just to put this in perspective,if I'm reading the chart right, um,
uh, Jim, there was only one time duringthe Biden administration where the
increase, the, the people that saidit was gonna increase was over 50%.
(09:12):
One time, uh, and, and,and now we're there today.
And, and, uh, and, and, and it just goesback to what we've been saying before.
I think we're in a more challengingenvironment for agriculture exports
than quite a bit of the timeduring the Biden administration.
But maybe that's just me.
Well, the interesting thing is this, thisdramatic turnaround because if you, again,
(09:33):
if you look at the chart that we've gotin our report and, and in the, uh, online
chart library, you know, you can see therewas this long term downtrend dating back
to 2020 with respect to people becomingprogressively less optimistic about growth
in exports, which historically been anengine of growth for U.S. agriculture.
And this is the most dramatic onemonth turnaround in that data set.
(09:57):
So it's, it's, I guess what itdemonstrates to me, Michael, is that we
are in an environment where sentimenton a variety of topics is heavily
influenced by the headlines of the day.
I think that's a good way to put it.
Um, and we're seeing thatin other markets as well.
I mean, the stock market iscertainly evidence of that as well.
So people are very influencedby whatever the headlines are.
(10:19):
And uh, as you pointed out earlier,this was a week when people became more
optimistic about trade and, and moreoptimistic about markets in general.
So we included some questions thismonth to try and learn a little bit
more about people's perspective on,uh, free trade in general and tariffs.
And so some of these were questionsthat we originally posed back
(10:41):
in 2020, so it provides kindof an interesting comparison.
Uh, so the first question is, howstrongly do you agree with the following
statement, free trade benefits agricultureand most other American industries.
So a majority of producers across theboard, we asked this three times in 2020.
We asked it in October,November, and December of 2020,
(11:03):
and now here in May of 2025.
A majority of producers say theythink free trade is beneficial.
But when you compare the results thismonth to 2020, a higher percentage
of producers say they disagreethat free trade is beneficial.
So for example, in May of 2025,it was 18% who say they either
disagree or strongly disagree.
(11:24):
Versus seven to maybe 12%who felt that way in 2020.
And so to me that's the difference betweenthese, these, what we picked up in May
versus what we've picked up back in 2020.
There's not as much agreementthat free trade is beneficial.
Or stated another way, there's,there's more people saying
it's, it's not beneficial.
(11:45):
Yeah.
There is more people, certainly, likeyou said, there's more people think,
uh, strongly disagreeing or disagreeingwith this statement, 18% compared
to 12% back in November of 2020.
And, and lower than that inOctober and December of 2020.
But really stood out to me.
One of the things that reallystood out to me is 28% strongly
agreed with this statement in May.
(12:06):
That was close to 50%, uh, when we askedthis in October, November, and December.
And so there's, there's certainly,there's certainly a much fewer
people that strongly agreewith this, with this statement.
Now we specifically use freetrade here and not fair trade.
I think it's important to point thatout 'cause I do think there's different
connotations between those two terms.
Yeah, that's a good point.
(12:27):
And, and I agree with you.
I think when you lookat the chart that is.
Quite, quite, uh, noticeable.
The fact that we have a much lowerpercentage who strongly agree.
Um, so we've been asking this questionnow for the last couple of months.
This is the third time.
What impact do you expect theU.S. government's imposition
of tariffs on imports will haveon your farms income in 2025?
(12:51):
And compared to March and April,fewer producers in May said they
expect a negative impact on farmincome from the U.S.' use of tariffs.
Um, you know, if you look at thenumbers, I think this month it
was 43% who either expect a verynegative or a negative impact.
Last month it was 56%.
When I say last month ofApril, uh, in March it was 57%.
(13:15):
So, um, fewer people are worried aboutthe impact on their farm's income
than what we were looking at before.
It's still a large number.
It's, but it's less than half.
And this certainly helps explain,uh, what happened to the, in
the Index or Current Conditions.
Yeah, it picks up some ofthat improvement in optimism.
We've been asking this question for quitesome time, so I think it's worth sharing.
(13:38):
Looking ahead to next year,what are your biggest concerns
for your farming operation?
No big change this month.
I mean, number one continuesto be high input cost.
This month it was 37% of thepeople in the survey said that
was their biggest concern.
Number two is lower cropin livestock prices at 23%.
Um, you know, we did pick up a few morepeople worried about interest rates,
(14:00):
uh, which I think is consistent withwhat's taken place in the markets, right?
Uh, with some, somejumps in interest rates.
People a little more worried about that.
Availability of inputs was at 8%.
Um, that's been as low as five.
Uh, it's down slightly from last month.
You know, we're, we've beenpicking up some concern there.
A little bit more on theenvironmental policy side.
(14:22):
9% this month.
I think last month it was around 6%.
So, uh, no big shifts there,but, uh, what's your take?
Yeah, I know no big shifts there andhigher input costs remains the number
one, like it has been for months.
Yeah, I think, uh, well theone to watch in this list is
probably rising interest rates.
Yes.
(14:42):
And maybe availability of inputs.
Would you agree with that?
Yes, and it, and just the fact thatwe, we, we have to remember what
this looked like prior to COVID.
We didn't ask this question as frequently.
We did ask questions similarto this prior to COVID.
Prior to COVID, the in input costwould've not been high on that list.
I mean, ever since, ever since COVID, uh,in input costs, higher input costs and
(15:04):
interest rates have been really important.
You know, interest rates obviouslymore recent, uh, but, uh, those,
those remain the, the, uh, the twoof the most important items that
are, that are concerns to producers.
Yeah.
So we've been asking people periodicallyabout how important it is that a new farm
bill be passed, uh, in the current year.
And this time it's obviously 2025.
(15:25):
Um.
A two months in a row, just overhalf of producers have said the
passage of a new farm bill iseither important or very important.
This month, I think it was, 71%.
I think last month itwas either 69 or 70%.
So very close.
So a, a substantial majority ofproducers think it's important
that a farm bill be passed.
And then this month, the newwrinkle was we did ask people
(15:46):
about PLC reference prices.
So in both with respect to both cornand soybeans, we said in a new farm
bill, do you expect the PLC referenceprice for corn, which is currently
$4 and 26 cents per bushel, to beunchanged, increased, or reduced.
And we asked the same questionwith respect to soybeans.
Uh, do you expect the PLC referenceprice for soybeans, which is
(16:07):
currently $9.66 per bushel to beunchanged, increased, or reduced?
And when you look at those results,well, I'll let you summarize.
What, what do you think?
I think they're consistent withthe, with the, with the, with the
information coming out of Washington,DC uh, some of the, some of, some
of the, the, the bills, uh, that areworking their way through Congress.
I think they're consistentwith, with that.
(16:29):
Um, uh, but, but I, I wanna goback to the farm bill question.
Given the policy uncertainty that we'recurrently seeing, I've been telling
people, reporters and, and other, youknow, others, uh, that are interested in
the Ag Economy Barometer, that I can seewhy they think this is really important.
We need that safety net.
We need that multi-year safety net tokind of mitigate, uh, some of the policy
(16:51):
uncertainty we're seeing with respectto monetary policy and trade policy.
Yeah.
Stated in another way, they'relooking for a backstop.
Right?
They're looking for a safety net.
Yeah.
And what do you make of, ofthe reference price responses?
So to summarize, 39% said they expectedthe corn reference price to to increase,
and 43% said they expected to seethe soybean reference price increase.
(17:16):
I'm gonna round those off and sayroughly four outta 10 people, uh,
think that those two prices are gonnago up in the upcoming farm Bill.
What's really interesting aboutthat, if, if $4.26 corn, for example,
uh, we're still a little bit belowthe, the, the average corn price
since 2007, but not that much below.
I think if, I think the average corn pricein the U.S. since 2007 is about $4.50.
(17:41):
And so to me, we're getting awfulclose to that average price and
back in my, my policy class is, yougotta be careful there on how you,
how you, uh, how do you incentivize,you know, producing certain crops.
Uh, and, and particularly when youcompare, uh, compare these two, I think,
I think people could, could, couldargue under the, under the old farm bill
(18:05):
that the reference price for soybeansis probably too low compared to corn.
And so to me, you can make astronger case for the increase in,
in soybean prices than corn prices.
But I, I think you're gonna, I thinkyou're gonna be mixing up signals here,
uh, in terms of planning intentions,if, if you increase, have Ukraine
increased corn and soybeans, andthen some of the other, uh, some of,
(18:25):
some of the other reference prices.
We've been down this path in multipletimes in U.S. ag policy, when you
raise those reference prices, targetprices, et cetera, and the mechanics
are always a little bit differentin terms of how the programs work.
But when you raise those too high.
Set those bars too high, you cancreate some challenges with respect
to building of inventories, right?
(18:46):
Yes.
So that's, that's obviously the concern.
So with all the talk about, uh,restrictions on immigration or lower
integration, we decided to ask somequestions about that with respect to what
impact it might be having on farm labor.
So the first question was, do younormally hire non-farm non-family
members to work in your farm operation?
(19:06):
And roughly half, 51% of thepeople in the survey said yes.
So if you said yes to that question,you received a follow-up question, which
was, are you having, or do you expectto have difficulty hiring adequate labor
in 2025 for your farm operation as aresult of the U.S. administration's
policy to reduce immigration?
And there's two ways of looking atthis, Michael, and I think I'm gonna,
(19:28):
before I present the results, I'm gonnaremind listeners of who we survey.
We survey producers of the major crops,corn, soybeans, wheat, and cotton.
And we survey producers oflivestock that produce, for example,
hogs, beef cattle, and dairy.
We do not intentionally surveyspecialty crop producers.
(19:49):
Now, we do get some of those folksin the survey, but it's because they
produce one of those other commodities.
So with that introduction, I'll tellyou that 74% said they were expected to
have no difficulty, but 26% said theywould have or expected to have either
a lot of difficulty or some difficulty.
A lot of difficulty was 10%,some difficulty was 16%.
(20:13):
So Michael, you and I weretalking about this earlier.
That might be the more significantpart given who we're surveying
the producers of major crops.
Major livestock enterprises, roughlyone fourth are expecting to see
some difficulty in hiring labor.
Yeah, that, that seems high.
When we, uh, given the fact that, thatquite a few of these farms probably
have very few hired employees.
(20:34):
I mean, we, we, this questionobviously went to those that do have,
uh, do have hired labor, but quitea few of those people probably only
have one, two, uh, three people.
So the fact that a quarter ofthem are having some difficulties
probably, probably fairly high.
Yeah.
I mean, we'll probably ask this again.
Oh, I think we will ask it againand kind of see how it, how it looks
as we progress through the year.
But, uh, yeah, that's at first glance,when you say three-fourths, no difficulty,
(20:59):
you think, well, okay, not a big problem.
But then you start thinking about whowe survey and the fact that it's really
more likely to in have an impact onspecialty crop producers especially.
Um, the fact that we've got oneout of four saying some degree
of difficulty, uh, that's.
Yeah.
And if a person has one or twohired employees and you lose one,
(21:20):
you have a lot of difficulty.
That's a, that's a pretty big challengefor, for, for a farm in that situation.
So,
yeah.
Yeah.
Good point.
Okay, so the last question isone we've been asking now, I
think, uh, a couple of times now.
So I, do you expect the increaseduse of tariffs by the U.S. to
strengthen or weaken the U.S.ag economy in the long run?
(21:40):
So two months in a rownow, April and and May.
We've got almost identical responses.
And April 70% of the people saidthey expect the use of tariffs to
strengthen the U.S. ag economy.
In the long run thismonth in May, it was 69%.
So really no change.
So a large majority of peoplethink this will have a positive
impact on the U.S. ag economy.
(22:01):
Um, those that does not include,I don't, I don't know anybody
in the, in the ag economicsprofession that agrees with that.
But, but that's what producersare telling us, right?
Uh, yeah.
I, I, I don't, I, I personally don't,don't agree with this, but, uh, uh,
but, but that, I think that explainswhy we have the highest Index of
Future Expectations since April, 2021.
Uh, if you really believe this, you'repretty optimistic about the long run.
(22:22):
You know, and, and thinking aboutwhy people might respond this way.
Uh, it appears that they'rethink the use of tariffs as a
negotiating tactic is gonna windup in a, in a favorable outcome.
Is that fair to say?
I think that's right, but again,we've talked about that before.
I worry about, I worry aboutlong-term market share and what that
does to the confidence of peoplethat are buying our products, uh,
(22:43):
that I really worry about that.
Yeah, I think we both worry aboutthat, but I think, I think what we're
picking up in the survey is thisidea that as a negotiating t, that
it will wind up opening markets,
we're gonna get better deals,
it, it will wind up opening markets.
'Cause we've always had somedifficulty with some countries with
respect to import limitations andthere's, I think we're picking up
this expectation that those will berelaxed because of use of this policy.
(23:05):
So it's an open question
Yes.
As to who's right.
Time will tell.
Yeah.
It's an open question is who's right.
But that's what we'repicking up on the survey.
So, so that wraps up thehighlights of this month's survey.
You can get the full report on ourwebsite, purdue edu slash ag barometer.
Of course, you can listen to thispodcast not only for the summarizing,
uh, the results of the ag economybarometer, but also, lots of other
(23:26):
farm management news and informationtopics on the Purdue Commercial AgCast.
On behalf of the Center for CommercialAgriculture and my colleague Dr.
Michael Langemeier, I'm James Mintert.
Thanks for listening.
Welcome to Purdue Commercial AgCast thePurdue University Center for Commercial
Agriculture's podcast featuring farmmanagement news and information.
I'm your host, James Mintert,Emeritus Professor of agricultural
economics at Purdue University.
And joining me today is my colleague, Dr.Michael Langemeier, director of the Center
for Commercial Agriculture, and also aprofessor of Ag Economics here at Purdue.
We're gonna review the results fromthe May, 2025 Purdue University-CME
(00:23):
Group Ag Economy Barometer surveyof farmers from across the nation.
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
12th through the 16th of May.
(00:45):
And Michael, the barometer rose10 points this month to 158.
That's the highest barometer readingwe've gotten since May of 2021 and
continues the, the trend we've had ofstrong barometer readings ever since
the election last fall, and, and to someextent, maybe dating back to October.
The Current Condition Indexrose five points to 146.
(01:06):
That's the highest Current ConditionIndex since December of 2021.
And of course, the the biggest movewas in the Future Expectation Index.
It was up 12 points to 164.
That's the highest Future ExpectationsIndex since April of 2021.
So the biggest reason the barometerwent up was because people became more
optimistic about the future, but theyalso became a little more optimistic
(01:29):
about the current situation on theirfarms and, and in the U.S. ag economy.
I wasn't surprised thatthe barometer went up.
But maybe the magnitude of thejump was a little bit surprising.
Yeah, I'm in the same camp.
I wasn't surprised it went up.
During the week we were asking this,there was some good news regarding
tariffs with respect to China.
(01:49):
I don't exact exactly whatthe timing was there, but it
certainly was during that week.
And so I think that played into the,to the optimism, uh, we, we saw in, in
this month's, uh, this month's reading.
I'm still surprised, however,that the Index of Current
Conditions is as strong as it is.
That also went up five points.
Um, so that was, that wasa little surprising to me.
(02:09):
Yeah, that's sort of my take and, andagain, this administration continues
to have these short term, um, delaysin implementation of, of tariffs.
And that seems to give us this bouncein terms of expectations, not just in
our index, but also in in other indexes.
Right.
You see it in the stock market, elsewhere.
So you get these very short runresponses and I think we definitely
(02:31):
picked up some of that this month.
Um, the Farm Financial PerformanceIndex was up eight points to 109.
That's just two points lowerthan it was back in January.
And again, it's the highest indexreading since December of 2022.
And you know, when you look atthe chart, you can really see
how that change has taken place.
Going back to last fall, you goback to September, that index
(02:52):
was at 68 and now we're at 109.
So we've really seen thisdramatic improvement in that
Farm financial performance Index.
Some of that relates to 2025expectations versus 2024 versus,
you know, last fall people werecomparing 2024 to 2023, I think.
But still, um, I don't know, alittle, a little optimistic, isn't it?
(03:15):
I, I think so.
But, but, but I do think '25is gonna be as good as '24.
And so, and so when you, when I look at,when I look at, uh, budget projections,
for example, I, I think it's fairlyconsistent with the budget projections.
Okay.
Uh, and you've said that before.
I, I guess, um, I, I, well, overall, Ijust continue to be a little surprised
(03:36):
at the optimism we're picking up.
It doesn't necessarily mean thisis gonna be a good year, but it,
what that tells me is they thinkit's gonna be similar to '24.
Yeah.
And, and I would agree with that.
And that's how the question is phrased.
So that's, that's a good point.
Uh, the Farm Capital InvestmentIndex did fall this month.
It fell six points.
But that was still pretty strongrelative to the last three years.
You go back this timelast year, we were at 35.
(03:56):
2 years ago, we were at 37.
Three years ago we were at 35.
You really have to go back fouryears to see the kind of values that
we're seeing on this index right now.
Um, in fact, going back to 2021,you'd have to find a May reading
higher than this year's reading.
So, um.
The fact that it fell a littlebit isn't too surprising to me.
(04:17):
I guess the key point is it's stillabove what I consider to be the trading
range that the upper bend of thattrading range for the better part
of three, three and a half years wasabout 50, and we're still above that.
So I guess I don't see a big change there.
What, what's your take, Michael?
Yeah, I don't either.
I mean, I, you know, this, this thing,this thing does a little seesawing.
Back and forth, but again, thesurprise is that it's as high as it is.
(04:39):
When you look underneath tofigure out why the index changed.
The percentage reporting good time tomake large investments fell from 25
to 19%, while the percentage reportingbad times was unchanged to 64%.
So that's what caused the index to move.
You did see a little loss of optimismabout this being a good time.
I dunno, maybe a little bit surprisinggiven the bump we saw in future
(05:02):
expectations, uh, those two, maybeI would've expected to see a little
stronger correlation, but stillthat's, that's what took place there.
Um, the interesting thing is if you lookat the last several months and look at
the question that says, what are yourplans for farmer senior purchases in the
upcoming year compared to a year ago?
There has been a little bit of a driftthere and going back to February the
(05:25):
percentage of people who expect to reducetheir farmer stream purchases in the
current or in the upcoming year comparedto a year ago, has been drifting lower.
Back in February it was 54% we'regonna pull back, uh, been drifting
lower the last couple of months.
This month it was at 48%.
The percentage saying that they're gonnahold their investments about the same has
climbed from about 36% back in February,uh, to 43% these last two months.
(05:51):
So in a way I think that's a little bitconsistent with the strength we've seen in
the Capital Investment Index, don't you?
Yes.
I, I do think, I dothink that's consistent.
And, and the, the May, the may numberswere very similar to the January numbers.
I, I, I found that rather curious.
But, but they were, I. And so it,it looks like we are a little more
negative in February, March and April.
(06:12):
And now they're just a little bit morepositive, uh, you know, consistent
with where they were at in January.
So it remains to be seen ifthat's gonna have any impact
on things like tractor sales.
So far, certainly in the first quarterthis year that didn't, was not the case.
Um, longer term it'd be interestingto see what, what takes place there
and whether or not there may be isa little bit of moderation there.
(06:33):
Um, if there's one number on thesurvey this month that surprised me
the most, it's probably this one,Michael, and that is the Short-Term
Farmland Value Expectation Index.
It jumped 14 points to a reading of 124.
Um, that's the highest indexfor that since a little over
a year ago, March of 2024.
And, you know, I, I'm just kind ofsurprised that people's expectations
(06:58):
for farmland values would changethat much in one month given the news
that we had and, and what took place.
How about you?
Yeah, usually this is very consistentwith the Index of current Conditions.
It was up slightly, so I would,I would've expected this to be up
slightly, but not as much as it was.
I mean, that's a big jump.
Yeah, and if you look at the question thatthat index is based on, which is basically
(07:20):
asking people about their farmland priceexpectations for the next 12 months.
The percentage of producers who expecthigher farmland values this month jumped
from 25% in April to 37% this month.
Um, and that shift occurred from, withpeople moving away from the, uh, expecting
values to hold steady category intothat, uh, expecting values to increase.
(07:44):
Uh, the percentage of peopleexpecting values to hold
steady dropped from 60 to 50%.
So it's not like people flippedfrom negative to positive, they
flipped from percentage holdingsteady to becoming more optimistic.
So I guess maybe in that context it's alittle more understandable, but still.
A pretty big jump.
Uh,
Yeah, really big jump.
(08:05):
Um, we've been asking this question allthe way back to 2019, and we've talked
about it not every single month, butperiodically here about the lack of
optimism people have about ag exports.
So the question is, over the nextfive years, do you think ag exports
are more likely to increase,decrease, and remain about the same?
And for some time, people havein over time become less and less
(08:27):
optimistic about exports increasing.
That changed this month big time.
Uh, the percentage of people who saythey expect exports to increase over
the next five years in May jumped to52% up from just 33% a month earlier.
That's the highest percentageexpecting exports to increase
(08:49):
since November of 2020.
This was a truly amazing result.
I did not expect this.
I expected to be a little bitmore positive, but not this much.
And just, just to put this in perspective,if I'm reading the chart right, um,
uh, Jim, there was only one time duringthe Biden administration where the
increase, the, the people that saidit was gonna increase was over 50%.
(09:12):
One time, uh, and, and,and now we're there today.
And, and, uh, and, and, and it just goesback to what we've been saying before.
I think we're in a more challengingenvironment for agriculture exports
than quite a bit of the timeduring the Biden administration.
But maybe that's just me.
Well, the interesting thing is this, thisdramatic turnaround because if you, again,
(09:33):
if you look at the chart that we've gotin our report and, and in the, uh, online
chart library, you know, you can see therewas this long term downtrend dating back
to 2020 with respect to people becomingprogressively less optimistic about growth
in exports, which historically been anengine of growth for U.S. agriculture.
And this is the most dramatic onemonth turnaround in that data set.
(09:57):
So it's, it's, I guess what itdemonstrates to me, Michael, is that we
are in an environment where sentimenton a variety of topics is heavily
influenced by the headlines of the day.
I think that's a good way to put it.
Um, and we're seeing thatin other markets as well.
I mean, the stock market iscertainly evidence of that as well.
So people are very influencedby whatever the headlines are.
(10:19):
And uh, as you pointed out earlier,this was a week when people became more
optimistic about trade and, and moreoptimistic about markets in general.
So we included some questions thismonth to try and learn a little bit
more about people's perspective on,uh, free trade in general and tariffs.
And so some of these were questionsthat we originally posed back
(10:41):
in 2020, so it provides kindof an interesting comparison.
Uh, so the first question is, howstrongly do you agree with the following
statement, free trade benefits agricultureand most other American industries.
So a majority of producers across theboard, we asked this three times in 2020.
We asked it in October,November, and December of 2020,
(11:03):
and now here in May of 2025.
A majority of producers say theythink free trade is beneficial.
But when you compare the results thismonth to 2020, a higher percentage
of producers say they disagreethat free trade is beneficial.
So for example, in May of 2025,it was 18% who say they either
disagree or strongly disagree.
(11:24):
Versus seven to maybe 12%who felt that way in 2020.
And so to me that's the difference betweenthese, these, what we picked up in May
versus what we've picked up back in 2020.
There's not as much agreementthat free trade is beneficial.
Or stated another way, there's,there's more people saying
it's, it's not beneficial.
(11:45):
Yeah.
There is more people, certainly, likeyou said, there's more people think,
uh, strongly disagreeing or disagreeingwith this statement, 18% compared
to 12% back in November of 2020.
And, and lower than that inOctober and December of 2020.
But really stood out to me.
One of the things that reallystood out to me is 28% strongly
agreed with this statement in May.
(12:06):
That was close to 50%, uh, when we askedthis in October, November, and December.
And so there's, there's certainly,there's certainly a much fewer
people that strongly agreewith this, with this statement.
Now we specifically use freetrade here and not fair trade.
I think it's important to point thatout 'cause I do think there's different
connotations between those two terms.
Yeah, that's a good point.
(12:27):
And, and I agree with you.
I think when you lookat the chart that is.
Quite, quite, uh, noticeable.
The fact that we have a much lowerpercentage who strongly agree.
Um, so we've been asking this questionnow for the last couple of months.
This is the third time.
What impact do you expect theU.S. government's imposition
of tariffs on imports will haveon your farms income in 2025?
(12:51):
And compared to March and April,fewer producers in May said they
expect a negative impact on farmincome from the U.S.' use of tariffs.
Um, you know, if you look at thenumbers, I think this month it
was 43% who either expect a verynegative or a negative impact.
Last month it was 56%.
When I say last month ofApril, uh, in March it was 57%.
(13:15):
So, um, fewer people are worried aboutthe impact on their farm's income
than what we were looking at before.
It's still a large number.
It's, but it's less than half.
And this certainly helps explain,uh, what happened to the, in
the Index or Current Conditions.
Yeah, it picks up some ofthat improvement in optimism.
We've been asking this question for quitesome time, so I think it's worth sharing.
(13:38):
Looking ahead to next year,what are your biggest concerns
for your farming operation?
No big change this month.
I mean, number one continuesto be high input cost.
This month it was 37% of thepeople in the survey said that
was their biggest concern.
Number two is lower cropin livestock prices at 23%.
Um, you know, we did pick up a few morepeople worried about interest rates,
(14:00):
uh, which I think is consistent withwhat's taken place in the markets, right?
Uh, with some, somejumps in interest rates.
People a little more worried about that.
Availability of inputs was at 8%.
Um, that's been as low as five.
Uh, it's down slightly from last month.
You know, we're, we've beenpicking up some concern there.
A little bit more on theenvironmental policy side.
(14:22):
9% this month.
I think last month it was around 6%.
So, uh, no big shifts there,but, uh, what's your take?
Yeah, I know no big shifts there andhigher input costs remains the number
one, like it has been for months.
Yeah, I think, uh, well theone to watch in this list is
probably rising interest rates.
Yes.
(14:42):
And maybe availability of inputs.
Would you agree with that?
Yes, and it, and just the fact thatwe, we, we have to remember what
this looked like prior to COVID.
We didn't ask this question as frequently.
We did ask questions similarto this prior to COVID.
Prior to COVID, the in input costwould've not been high on that list.
I mean, ever since, ever since COVID, uh,in input costs, higher input costs and
(15:04):
interest rates have been really important.
You know, interest rates obviouslymore recent, uh, but, uh, those,
those remain the, the, uh, the twoof the most important items that
are, that are concerns to producers.
Yeah.
So we've been asking people periodicallyabout how important it is that a new farm
bill be passed, uh, in the current year.
And this time it's obviously 2025.
(15:25):
Um.
A two months in a row, just overhalf of producers have said the
passage of a new farm bill iseither important or very important.
This month, I think it was, 71%.
I think last month itwas either 69 or 70%.
So very close.
So a, a substantial majority ofproducers think it's important
that a farm bill be passed.
And then this month, the newwrinkle was we did ask people
(15:46):
about PLC reference prices.
So in both with respect to both cornand soybeans, we said in a new farm
bill, do you expect the PLC referenceprice for corn, which is currently
$4 and 26 cents per bushel, to beunchanged, increased, or reduced.
And we asked the same questionwith respect to soybeans.
Uh, do you expect the PLC referenceprice for soybeans, which is
(16:07):
currently $9.66 per bushel to beunchanged, increased, or reduced?
And when you look at those results,well, I'll let you summarize.
What, what do you think?
I think they're consistent withthe, with the, with the, with the
information coming out of Washington,DC uh, some of the, some of, some
of the, the, the bills, uh, that areworking their way through Congress.
I think they're consistentwith, with that.
(16:29):
Um, uh, but, but I, I wanna goback to the farm bill question.
Given the policy uncertainty that we'recurrently seeing, I've been telling
people, reporters and, and other, youknow, others, uh, that are interested in
the Ag Economy Barometer, that I can seewhy they think this is really important.
We need that safety net.
We need that multi-year safety net tokind of mitigate, uh, some of the policy
(16:51):
uncertainty we're seeing with respectto monetary policy and trade policy.
Yeah.
Stated in another way, they'relooking for a backstop.
Right?
They're looking for a safety net.
Yeah.
And what do you make of, ofthe reference price responses?
So to summarize, 39% said they expectedthe corn reference price to to increase,
and 43% said they expected to seethe soybean reference price increase.
(17:16):
I'm gonna round those off and sayroughly four outta 10 people, uh,
think that those two prices are gonnago up in the upcoming farm Bill.
What's really interesting aboutthat, if, if $4.26 corn, for example,
uh, we're still a little bit belowthe, the, the average corn price
since 2007, but not that much below.
I think if, I think the average corn pricein the U.S. since 2007 is about $4.50.
(17:41):
And so to me, we're getting awfulclose to that average price and
back in my, my policy class is, yougotta be careful there on how you,
how you, uh, how do you incentivize,you know, producing certain crops.
Uh, and, and particularly when youcompare, uh, compare these two, I think,
I think people could, could, couldargue under the, under the old farm bill
(18:05):
that the reference price for soybeansis probably too low compared to corn.
And so to me, you can make astronger case for the increase in,
in soybean prices than corn prices.
But I, I think you're gonna, I thinkyou're gonna be mixing up signals here,
uh, in terms of planning intentions,if, if you increase, have Ukraine
increased corn and soybeans, andthen some of the other, uh, some of,
(18:25):
some of the other reference prices.
We've been down this path in multipletimes in U.S. ag policy, when you
raise those reference prices, targetprices, et cetera, and the mechanics
are always a little bit differentin terms of how the programs work.
But when you raise those too high.
Set those bars too high, you cancreate some challenges with respect
to building of inventories, right?
(18:46):
Yes.
So that's, that's obviously the concern.
So with all the talk about, uh,restrictions on immigration or lower
integration, we decided to ask somequestions about that with respect to what
impact it might be having on farm labor.
So the first question was, do younormally hire non-farm non-family
members to work in your farm operation?
(19:06):
And roughly half, 51% of thepeople in the survey said yes.
So if you said yes to that question,you received a follow-up question, which
was, are you having, or do you expectto have difficulty hiring adequate labor
in 2025 for your farm operation as aresult of the U.S. administration's
policy to reduce immigration?
And there's two ways of looking atthis, Michael, and I think I'm gonna,
(19:28):
before I present the results, I'm gonnaremind listeners of who we survey.
We survey producers of the major crops,corn, soybeans, wheat, and cotton.
And we survey producers oflivestock that produce, for example,
hogs, beef cattle, and dairy.
We do not intentionally surveyspecialty crop producers.
(19:49):
Now, we do get some of those folksin the survey, but it's because they
produce one of those other commodities.
So with that introduction, I'll tellyou that 74% said they were expected to
have no difficulty, but 26% said theywould have or expected to have either
a lot of difficulty or some difficulty.
A lot of difficulty was 10%,some difficulty was 16%.
(20:13):
So Michael, you and I weretalking about this earlier.
That might be the more significantpart given who we're surveying
the producers of major crops.
Major livestock enterprises, roughlyone fourth are expecting to see
some difficulty in hiring labor.
Yeah, that, that seems high.
When we, uh, given the fact that, thatquite a few of these farms probably
have very few hired employees.
(20:34):
I mean, we, we, this questionobviously went to those that do have,
uh, do have hired labor, but quitea few of those people probably only
have one, two, uh, three people.
So the fact that a quarter ofthem are having some difficulties
probably, probably fairly high.
Yeah.
I mean, we'll probably ask this again.
Oh, I think we will ask it againand kind of see how it, how it looks
as we progress through the year.
But, uh, yeah, that's at first glance,when you say three-fourths, no difficulty,
(20:59):
you think, well, okay, not a big problem.
But then you start thinking about whowe survey and the fact that it's really
more likely to in have an impact onspecialty crop producers especially.
Um, the fact that we've got oneout of four saying some degree
of difficulty, uh, that's.
Yeah.
And if a person has one or twohired employees and you lose one,
(21:20):
you have a lot of difficulty.
That's a, that's a pretty big challengefor, for, for a farm in that situation.
So,
yeah.
Yeah.
Good point.
Okay, so the last question isone we've been asking now, I
think, uh, a couple of times now.
So I, do you expect the increaseduse of tariffs by the U.S. to
strengthen or weaken the U.S.ag economy in the long run?
(21:40):
So two months in a rownow, April and and May.
We've got almost identical responses.
And April 70% of the people saidthey expect the use of tariffs to
strengthen the U.S. ag economy.
In the long run thismonth in May, it was 69%.
So really no change.
So a large majority of peoplethink this will have a positive
impact on the U.S. ag economy.
(22:01):
Um, those that does not include,I don't, I don't know anybody
in the, in the ag economicsprofession that agrees with that.
But, but that's what producersare telling us, right?
Uh, yeah.
I, I, I don't, I, I personally don't,don't agree with this, but, uh, uh,
but, but that, I think that explainswhy we have the highest Index of
Future Expectations since April, 2021.
Uh, if you really believe this, you'repretty optimistic about the long run.
(22:22):
You know, and, and thinking aboutwhy people might respond this way.
Uh, it appears that they'rethink the use of tariffs as a
negotiating tactic is gonna windup in a, in a favorable outcome.
Is that fair to say?
I think that's right, but again,we've talked about that before.
I worry about, I worry aboutlong-term market share and what that
does to the confidence of peoplethat are buying our products, uh,
(22:43):
that I really worry about that.
Yeah, I think we both worry aboutthat, but I think, I think what we're
picking up in the survey is thisidea that as a negotiating t, that
it will wind up opening markets,
we're gonna get better deals,
it, it will wind up opening markets.
'Cause we've always had somedifficulty with some countries with
respect to import limitations andthere's, I think we're picking up
this expectation that those will berelaxed because of use of this policy.
(23:05):
So it's an open question
Yes.
As to who's right.
Time will tell.
Yeah.
It's an open question is who's right.
But that's what we'repicking up on the survey.
So, so that wraps up thehighlights of this month's survey.
You can get the full report on ourwebsite, purdue edu slash ag barometer.
Of course, you can listen to thispodcast not only for the summarizing,
uh, the results of the ag economybarometer, but also, lots of other
(23:26):
farm management news and informationtopics on the Purdue Commercial AgCast.
On behalf of the Center for CommercialAgriculture and my colleague Dr.
Michael Langemeier, I'm James Mintert.
Thanks for listening.
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