Federal policy uncertainty lowers farmer sentiment

Producer sentiment surged with the election of President Donald Trump, but dipped in March due to rising policy uncertainty regarding U.S. exports and trade, according to the Purdue University/CME Group Ag Economy Barometer.

Still, confidence remains relatively high compared to the past decade and much stronger than before the election.

The barometer hit 140 in March, down from 152 in February, as farmers' view of the future was less optimistic.

"That was still 25 points higher than it was back in October," said James Mintert, Purdue emeritus professor of agricultural economics at Purdue University, in an online breakdown of the report.

Falloffs in key crop prices since mid-February also were an important factor in farmers' sentiment change.

Export concerns

Historically, exports have been an important source of demand and strong exports have often correlated with robust farm incomes.

Since 2019, barometer surveys have asked producers about export expectations over the next five years.

Farmers initially were optimistic exports would grow, but that has continued to drop since 2021.

In March, producers' expectations for U.S. exports hit an all time low, with 30% of farmers and ranchers saying they thought shipments to foreign countries would fall.

That almost matched the percentage of producers who expected exports to rise.

"Producers' outlook for ag exports, which predominantly have been a real source of growth in the U.S. ag sector for decades, really shifted," Mintert said.

Trade policy

Since 2022, barometer surveys have also questioned producers about which policies or programs will be most important to their ag operations during the next five years.

Prior to the election, farmers were more concerned about interest rate policy than trade. Since Trump's win, concern about trade policy has jumped, with 43% of responders citing it as the most important policy or program.

About 13% of farmers pointed to interest rate policy as most important since the election.

Trade war compensation

The March barometer survey asked farmers about whether they thought something resembling 2019's Market Facilitation Program would be available to compensate for lower output prices attributable to a trade war.

About 65% of respondents said they think a similar program would be likely (52%) or very likely (13%).

In a related question, 74% of farmers in March said passage of a new farm bill was very important (49%) or important (25%) to them.

Historical perspective

Though the Ag Economy Barometer slipped in March, that's the second highest level for the month in at least 10 years.

In March 2021, the barometer was near its high for the past decade at 177.

The barometer was 113 in March 2022, 117 in March 2023 and 114 in March 2024.

Financial performance

A component of the report, the Farm Financial Performance Index, also fell in March, dropping 8 points to 102. That level suggests producers expect their financial performance to slightly exceed 2024.

The financial outlook, however, was likely beefed up by strong expectations from ranchers, which helped offset weaker projections from crop growers.

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