The Farm Capital Investment Index at 61 was 7 points higher in April than in March, reaching the highest investment index reading since May 2021. There was a marked shift in the investment index following the November 2024 election. From May through October 2024, the investment index averaged a reading of 36, while from November 2024 through April 2025, the average index value was 54 鈥� 50% higher than during the preceding six months. This month, one out of four respondents said it was a good time to make large investments, nearly double the percentage of respondents who said it was a good time to invest when surveyed from May through October of last year.

Although 25% of respondents this month reported that it鈥檚 a good time to invest, nearly two-thirds of producers in this month鈥檚 survey still said it was a bad time to invest, and that group鈥檚 view appears to be the driver behind weak new farm equipment sales so far in 2025. For example, the Association of 婷婷激情五月天 Manufacturers reported that first-quarter 2025 sales of tractors over 100 horsepower declined 19% compared to 2024鈥檚 first quarter, while new combine sales fell 38% below a year earlier.  

The Farm Financial Performance Index changed little in April. At a reading of 101, the index was just 1 point below a month earlier. April marked the fourth month in a row that the index was above 100, indicating that producers expect financial performance this year to equal or slightly exceed the year-ago level.

The Short-Term Farmland Value Expectations Index weakened in April to a reading of 110, which was 8 points below a month earlier. The decline in the index was primarily attributable to fewer producers reporting that they expect farmland values to increase in the year ahead, with a comparable increase in the percentage of producers saying they expect values to remain about the same.

The April survey included several questions focused on the impact of the U.S.鈥檚 tariff policy on U.S. agriculture. Although sentiment improved in April, farmers are still concerned that the U.S. government鈥檚 tariff policy will have a negative impact on farm incomes. Fifty-six percent of respondents to the April survey said they think the U.S. tariff policy will have either a negative or very negative impact on their farm鈥檚 income in 2025. In a related question, just over half (53%) of producers expect the increase in tariffs on imports to make it more difficult to obtain inputs from their suppliers this year. Producers who expect some difficulty in obtaining inputs pointed to three main areas of concern: fertilizer, parts for farm machinery and electronics and crop chemicals. Despite the concerns farmers expressed in the April survey about the impact of tariffs on farm incomes and availability of inputs for their farm operations, 70% of respondents said they expect the increased use of tariffs will, in the long run, strengthen the U.S. agricultural economy. 

Wrapping Up

Farmer sentiment improved in April as farmers鈥� appraisal of both current conditions and their expectations for the future improved compared to March. Agricultural producers are concerned that the U.S. tariff policy will reduce farm incomes in 2025. However, in the long run, there is an expectation among a majority of producers that the U.S. tariff policy will actually benefit U.S. agriculture. Finally, just over half of producers in the April survey expressed concern about the imposition of tariffs making it more difficult to obtain inputs from their suppliers later this year. Concerns were focused on the availability of fertilizer, parts for farm machinery and electronics and crop chemicals.

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U.S. farmers are concerned about the future of U.S. agricultural exports and trade policy. Since 2019, barometer surveys have included a question that asks producers about their expectations for U.S. agricultural exports over the next five years. Historically, exports have been an important source of demand for U.S. agricultural production, and strong exports have often been associated with strong farm incomes. In 2019 and 2020, producers were optimistic that exports would grow over the upcoming five years, but that optimism began to erode in 2021 and has continued to fall since that time. In March, producers鈥� expectations for U.S. exports in the next five years reached an all-time low in barometer surveys, with the percentage of producers who expect to see exports fall (30%) nearly matching the percentage of producers who expect to see exports rise.

Since late 2022, barometer surveys have periodically included a question that asks respondents which policies or programs will be most important to their farm in the next five years. Prior to the November 2024 election, farmers in our surveys reported that they were more concerned about interest rate policy than trade policy. Since the November election, concern about trade policy has skyrocketed, with 43% of respondents, on average, citing it as the most important policy or program affecting their farm. That compares to an average of 13% of farmers since the election who pointed to interest rate policy as most important.

Coinciding with concerns about trade policy and the impact on U.S. agricultural exports is the potential impact on farm income. The March survey included a question that asked farmers about their expectations regarding the likelihood that a program similar to 2019鈥檚 Market Facilitation Program (MFP) would be available to compensate for lower output prices attributable to a trade war. Nearl two-thirds (65%) of respondents said they think a follow-up to 2019鈥檚 MFP program would be either 鈥渓ikely鈥� (52%) or 鈥渧ery likely鈥� (13%). In a related policy question, 74% of farmers in March said that passage of a new farm bill this year was either 鈥渧ery important鈥� (49%) or 鈥渋mportant鈥� (25%) to them.

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Since 2020, each January barometer survey has included questions about farmers鈥� operating loans for the upcoming year. The percentage of respondents who said they expect to have a larger operating loan this year compared to a year ago rose to 18%, up slightly from last year鈥檚 15%. In a follow-up question, producers who expect to have a larger loan were asked why their loan size was increasing. This year, 23% of farmers who expect their loan size to increase said it was because they were carrying over unpaid operating debt from the prior year, up from 17% last year and just 5% two years ago. The shift is reflective of the decline in farm income, particularly crop income, that has taken place in the last two years and could be an early sign that financial stress among producers is increasing.  

The future of agricultural trade is on many producers鈥� minds. When asked in January which policy or program will be most important to their farm in the next five years, 42% of respondents chose 鈥渢rade policy,鈥� which was more than double the percentage who chose 鈥渃rop insurance program.鈥� Unsurprisingly, there is significant concern among U.S. farmers that a trade war could break out that negatively impacts U.S. ag exports, although attitudes did appear to shift from December to January. Over the last three months, the percentage of U.S. producers who think a trade war is either 鈥渓ikely鈥� or 鈥渧ery likely鈥� has ranged from a high of 48% in December to this month鈥檚 low of 40%. Meanwhile, the percentage of producers who think a trade war is either 鈥渦nlikely鈥� or 鈥渧ery unlikely鈥� rose to 29%, up from 21% in December.

Wrapping Up

Farmer sentiment remained strong at the start of the new year, rising modestly from December to January. Farmers reported an improvement in current conditions on their farms due in part to increases in crop prices from early December to mid-January. Farmers expect conditions to improve as the聽Future Expectations Index聽remains well above the聽Current Conditions Index. U.S. producers expect 2025 to be better than 2024, as the聽Farm Financial Performance Index聽is at its highest level since late 2021. However, producers are concerned about the future of agricultural trade, with over 40% of respondents citing 鈥渢rade policy鈥� as the most important policy for their farm in the next five years and 40% of producers saying that they think a trade war is either 鈥渓ikely鈥� or 鈥渧ery likely.鈥�

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罢丑别听Index of Future Expectations聽dropped just 8 points to 153, leaving that index 59 points higher than in September and 29 points above the October reading.

罢丑别听Index of Current Conditions declined 13 points to 100, indicating that producers鈥� appraisal of current conditions in U.S. agriculture and on their farms is weaker than their views regarding the future. Despite this month鈥檚 decline, the聽Current Conditions Index聽remains 24 points above its September low and 5 points higher than in October. Optimism about the future appears to be motivated primarily by producers鈥� expectations for a more favorable policy environment in the years ahead.

The Farm Capital Investment Index fell 7 points in December to a reading of 48. This month鈥檚 decline came on the heels of a 13-point rise in November. The percentage of respondents who said it鈥檚 a good time to invest declined to 17% compared to 22% a month earlier, while the percentage of farmers who said it鈥檚 a bad time for investments rose slightly to 69%, up from 67%. The investment index鈥檚 decline mirrored that of the Farm Financial Performance Index, which fell 8 points in December to 98.

Farmers鈥� future outlook for their farms and the agricultural sector remains noticeably more positive than at the end of summer. The drivers behind producers鈥� improved outlook for the future appear to be expectations for policy shifts following the November 2024 election. Expected policy shifts include environmental, estate and income tax policies.

Prior to the election, over 40% of producers said they expected to face more restrictive environmental regulations over the next five years. Following the election, less than 10% of producers said they expected a more restrictive regulatory environment.聽聽Before the election, 40% of farmers in our survey said they expected estate taxes to rise in the future. After the election, fewer than 10% said they look for estate taxes to rise within the next five years.

Additionally, leading up to the election, nearly four out of ten (38%) producers said they expected income taxes to rise in the future. Following the election, that percentage also fell below 10%. Finally, over half (55%) of respondents to the December survey said they expect the fall 2024 election outcome to lead to a stronger farm income safety net than was in place prior to the election.

One area of concern for U.S. farmers continues to be the future of international trade in agricultural products. Both the November and December barometer surveys asked producers about the likelihood of a 鈥漷rade war鈥� breaking out that has a negative impact on U.S. agricultural exports. Results reveal that many producers are concerned about this possibility. In December, 48% of farmers said they think a 鈥渢rade war鈥� that negatively impacts agricultural exports is either likely (32%) or very likely (16%). That鈥檚 up from 42% of respondents who felt that way in November. On the other end of the spectrum, just 21% of December鈥檚 respondents said that a 鈥渢rade war鈥� was either unlikely (17%) or very unlikely (4%). That鈥檚 down from 26% of farmer respondents who felt that way in November. Finally, when asked which policies or program will be most important to their farm in the next five years, 鈥渢rade policy鈥� emerged as the top choice in December, selected by 43% of producers, with 鈥渃rop insurance program鈥� trailing as the second-most common response at 17%.

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When asked about their biggest concerns in the year ahead, the top choice among producers once again was high input costs, chosen by 34% of respondents. However, weak commodity prices were also on producers鈥� minds, as 29% of producers in the July survey pointed to the risk of lower crop and livestock prices as a top concern, up from 25% of respondents in June. Only 17% of respondents cited rising interest rates as a top concern, down from 23% in June, consistent with signals from the Fed that interest rates have peaked.

The Farm Financial Performance Index weakened by 4 points in July to 81, leaving the index 6 points lower than a year earlier. July鈥檚 decline followed back-to-back improvements in the index in May and June. The index鈥檚 fall reflects farmers鈥� concerns about the impact of weakening commodity prices combined with high input prices. Although the cost of production for principal crops, including corn and soybeans, has fallen year-to-year, output prices have declined even more, raising the possibility of a cost-price squeeze for U.S. crop producers.

Farmland leasing discussions for the 2025 crop year are starting to take place across the nation. This month鈥檚 survey asked farmers who grow corn, soybeans, wheat, or cotton what their expectations are for cash rental rates in their area. Nearly three-fourths (72%) of farmers who responded to the July survey said they expect cash rental rates to remain about the same as in 2024. The remaining respondents鈥� views on cash rental rates were split almost evenly between those who expect rates to rise (15%) vs. those who expect rates to fall (13%). 

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The Farm Financial Performance Index climbed to 82, up 6 points compared to April. The index is based on a question that asks producers to compare their farm鈥檚 expected financial performance to last year. Despite this month鈥檚 improvement in the index, it remained 15 points lower than at the end of last year indicating that producers still expect 2024 to be a more challenging year financially than 2023.

Producers鈥� outlook on capital investments improved in May, but producers maintained a cautious attitude towards investments as the Farm Capital Investment Index came in at a reading of 35. Although the 4-point rise pulled the index off its all-time low reading of 31, this month鈥檚 survey still indicated that 77% of respondents feel it鈥檚 a bad time to make large investments, while just 12% of respondents said it was a good time to invest. Interest rates and relatively high prices for farm machinery and new construction were the two primary reasons cited for this being a bad time to make large investments. Among those producers who think it鈥檚 a good time to invest, nearly half (45%) said they felt that way because of high inventories at machinery dealers.

Interest in leasing farmland for solar energy production continues to rise. In both the April and May surveys approximately 20% of survey respondents, up from just 12% in March, said they have discussed leasing farmland for solar energy production in the last six months. Like April鈥檚 survey results, over half (55%) of respondents said they were offered a long-term lease rate of $1,000 per acre or more, and 27% said they were offered more than $1,250 per acre. Combining results from both the April and May barometer surveys, approximately 30% of respondents who have discussed leasing with a company have signed a solar energy lease on farmland they control. 

Summary: Farmer sentiment improved in May following a sharp decline in April. Increases in crop prices provided producers with a somewhat more optimistic financial outlook, which helped boost producer sentiment. Although sentiment and financial performance expectations improved in May compared to April, they both remain weak from a longer-term perspective. There was a small uptick in the Short-Term Farmland Value Expectation Index in May, but sentiment about farmland values in 2024 remains weaker than last fall. Interest in leasing farmland for solar energy production continues to rise as 1 out of 5 survey respondents reported discussing a solar energy lease with a company in just the last six months.

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When asked about their biggest concerns for their farm operation in the upcoming year, producers in this month鈥檚 survey continued to point to 鈥渉igh input costs鈥� (34% of respondents) and 鈥渓ower crop/livestock prices鈥� (28% of respondents) as their top two concerns. Interest rate worries among agricultural producers might have peaked as just 18% of February respondents cited 鈥渞ising interest rates鈥� as a top concern, down from 26% as recently as last November. 

Each year in February the barometer survey queries respondents regarding plans for their farm with a question focused on their farm operation鈥檚 growth plans for the upcoming 5-year period. This year nearly 4 out of 10 (38%) producers said they have 鈥渘o plans to grow鈥� and an additional 14% of respondents said they plan to 鈥渆xit or retire from farming鈥�. On the other hand, just over 3 out of 10 respondents in this month鈥檚 barometer survey said they expect their farm鈥檚 annual growth rate to exceed 5%. To help put growth rates in perspective, consider that a farm operation growing at a 5% annual rate will double in size in about 14 years whereas a farm growing at a 10% annual rate will need just 7 years to double in size.

Interest in leasing farmland for solar energy development continues to be strong. The February survey queried producers regarding whether they have discussed the installation of a solar energy project with a company in the last six months. If a respondent indicated they had been involved in discussing a possible solar lease, a follow-up question asked, following the construction of the solar project, what annual payment rate per acre was offered. Ten percent of respondents this month said they had discussed a solar leasing project with a company in the last 6 months. Payment rates offered varied widely, but it was notable that over half of respondents said they were offered a lease rate of $1,000 per acre or more.

Wrapping Up

Producers expressed a bit more optimism about the future in the February survey than in January, which pushed the Ag Economy Barometer up slightly. However, expectations for their farms鈥� financial performance in the upcoming year did not improve as the Farm Financial Performance Index remained 13 points lower than in December. Finally, producers who have engaged in discussions with companies about solar leasing their farmland indicate that per acre payment rates following construction have been rising with over half of them indicating they were offered a rate of $1,000 or more per acre.

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