Farmer sentiment plunges

Farmer sentiment plunged in April as the Purdue University-CME Group Ag Economy Barometer decreased 15 points from a month earlier to a reading of 99. The barometer’s sub-indices both declined from a month earlier, with the Current Condition Index at 83 – a decrease of 18 points – and the Future Expectations Index at 106 – a decrease of 14 points.

It was the weakest farmer-sentiment reading since June 2022 and the worst current-condition rating since May 2020. Concerns about current farm financial situations and expectations for weak financial performance in the year ahead were the driving forces behind the decrease in farmer sentiment. The April Ag Economy Barometer survey was conducted April 8-12.

The Farm Financial Performance Index decreased to 76 in April, 7 points less than a month earlier and 21 points less than fall 2023’s peak of 97. The financial index is based upon a question that asks farmers if they expect farm financial performance to be better than, worse than or about the same as the previous year. Fewer producers this month said they expected better or the same financial performance, with more respondents choosing worse performance than this past year. Farmer expectation that 2024 will be a difficult year was a big contributor to this month’s decline in farmer sentiment.

The April Short-Term Farmland Value Expectations Index reading of 112 was 12 points less than in March, more than wiping out the increase in the index that took place in March. The percentage of producers who expect farmland values in their area to increase during the next 12 months dipped to just 29 percent from 38 percent in March, while more respondents said they expect values to remain unchanged in the upcoming year. Concerns about farm financial performance in 2024 this month outweighed a more-optimistic view regarding future interest-rate changes. In April just 24 percent of respondents said they look for interest rates to increase during the next year, a decrease from 32 percent of farmers who felt that way in March.

This month’s survey again included questions about leasing farmland for solar-energy production. There was a noticeable increase in the percentage of respondents who reported a discussion with a company in the past six months about leasing farmland for solar-energy production. In April that percentage increased 7 points to 19 percent of respondents, an increase from 12 percent in March.

The April survey’s question related to farmland values in the next 12 months included a new response category – energy production. Although most producers continued to point to non-farm-investor demand as the key reason for their optimism about farmland values, 8 percent of this month’s respondents cited energy production as an important reason – such as wind, solar or carbon-capture usage.