Farmer Sentiment Slips Due to Rising Policy Uncertainty

Michael Langemeier & James Mintert, Purdue Center for Commercial Ag - 04/03/2025

Weaker expectations for the future led to a decline in farmer sentiment in March as the Purdue University-CME Group Ag Economy Barometer index fell 12 points to a reading of 140, down from 152 a month earlier. Farmers' view of the future was decidedly less optimistic in March than in February, as the Index of Future Expectations dipped to 144, which was 15 points lower than in February.

A weaker Current Conditions Index, which dropped 5 points in March to 132, also contributed to the weakening in farmer sentiment. Falloffs in key crop prices since mid-February, combined with concerns about the future of agricultural trade and farm policy, were important factors behind the sentiment shift. Even with the decline in expectations for the future, farmers were still more optimistic about the future than the current situation, as the Future Expectations Index remained 12 points higher than the Current Conditions Index.

Coinciding with the weakness in farmer sentiment, the Farm Capital Investment Index declined 5 points in March to 54. Despite this month's dip, March's investment index was still the second-highest reading recorded since June 2021. The Farm Financial Performance Index also fell in March, dropping 8 points to 102.

At a measurement of just above 100, the performance index suggests producers, on average, still expect their farm's financial performance to slightly exceed the level from a year ago. The financial performance outlook was likely buttressed by expectations for strong financial performance among livestock operations, which helped offset weaker expectations for many crop farms.

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's Market Facilitation Program (MFP) would be available to compensate for lower output prices attributable to a trade war.

Nearly two-thirds (65%) of respondents said they think a follow-up to 2019's MFP program would be either "likely" (52%) or "very likely" (13%). In a related policy question, 74% of farmers in March said that passage of a new farm bill this year was either "very important" (49%) or "important" (25%) to them.

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