Farmer confidence tumbled by 21 percent in the past two months to its lowest level since 2016, with three of every four farmers saying they expect bad times for the agricultural economy in the year ahead, said Purdue University on Tuesday. Producers taking part in the Ag Economy Barometer survey said they were worried about declining income because of low commodity prices and high production costs.
“These are the weakest … readings since March 2016, when the farm economy was in the throes of an economic downturn,” said agricultural economists James Mintert and Michael Langemeier, who oversee the barometer. “Producers expect markedly worse financial performance for their farms in the upcoming year compared to their expectations at this time last year.”
The barometer, a measure of farmer sentiment, fell to a reading of 88, its lowest since 85 in March 2016. The high reading for the barometer this year was 113 in July. It dropped to 100 in August, then fell by 12 points in the latest survey.
When asked about their greatest concerns for the coming year, farmers most frequently named higher input costs (34 percent) and lower commodity prices (33 percent). Rising interest rates was third, at 17 percent. Producers overwhelmingly said they would cut back on purchases of farm machinery and farm buildings.
Farm groups want a stronger federal backstop against low market prices, but Congress is a year behind schedule in delivering a new farm bill. Farm-state Republicans have proposed a 15 percent increase in so-called reference prices, which would make it easier to trigger crop subsidy payments. Senate Agriculture Committee chairwoman Debbie Stabenow says she has the money to pay for an increase of at least 5 percent.
“Congress must pass a new, modernized farm bill, but farmers need help now,” said Zippy Duvall, president of the American Farm Bureau Federation, largest U.S. farm group. “Until a new bill is enacted, Farm Bureau calls on lawmakers to provide funds for natural disaster and economic assistance to bridge the gap.”
The USDA forecasts net farm income, a gauge of profitability, at $140 billion this year, the fourth-highest total ever but a steep step down from the record $182 billion of 2022. A modest decline is likely in 2025 before income stabilizes at current levels, according to the Food and Agricultural Policy Research Institute, a think tank.
“Overall, pessimism about the state of the farm economy seems to be driven by comparisons to an anomalous boom year rather than the long history,” wrote agricultural economist Aaron Smith of the University of California in a blog. “Total net farm income in 2024 will be down substantially from the record highs of 2022, but still substantially above average. Almost all the decline will stem from the drop in corn and soybean prices, so those growers have it worse than most.”
In the Purdue survey, 73 percent of respondents said they expected bad times for the agricultural economy during the next 12 months; only 10 percent said they expected good times. Expectations of bad times have been building since 2021, the last time optimism was the rule.
And for the first time since 2020, when the farm economy surged, more farmers expect land values will fall (24 percent) than expect them to rise (19 percent) in the coming 12 months.
For the Ag Barometer, Purdue interviews operators with production worth at least $500,000 a year. According to USDA data, 7.4 percent of U.S. farms have annual sales of $500,000 or more. The survey has a margin of error of plus or minus 5 percent. The latest survey was conducted from Sept. 9 to 13.
The Ag Economy Barometer is available here.