Is Now The Time To Make On-The-Farm Capital Investments?

U.S. agriculture is facing many challenges, but is now a good time to make capital investments for the future of your operation? 

Last month’s Purdue University/CME Group Ag Economy Barometer’s Farm Capital Investment Index showed a surprising jump, rising seven points to the highest reading of that index since May 2021.  Purdue’s Dr. Jim Mintert said what was very surprising about that increase is that the index broke out of it’s trading range.  He said this turnabout in the Capital Investment Index was not expected.

"You look under the hood at the actual question we based that index on, which is ‘Thinking about large farm investments like buildings and machinery?  Do you think now is a good time or a bad time to buy such items?’  And what's been happening these last couple of months, and it happened again this month, was that fewer people are saying it's a bad time, more people are saying it's a good time," Mintert said.  "To put that in context, a year ago, 80% of the people in the surveys said it was a bad time to make investments in farm things like farm machinery.  This month, that was down to 64%. A year ago, 11% said it was a good time to make investments.  This time around, it was 25%, so that explains why the index is doing what it's doing.”

He noted the unfortunate thing is the optimism isn’t translating into machinery sales, which have been down in the first quarter of 2025.

“When you say it's a good time to make investments, part of what we're probably picking up there is the idea that, in the current environment, it's easier to strike a deal," Mintert  said.  "You can get a bigger discount, perhaps, off the list price. You know, there's more inventory out there.  Machinery dealers are maybe hungry to make sales, so there might be some opportunities there.  I think the index, the question we're asking, is probably picking up some of that as well.”

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