U.S. Farmers Staying Optimistic for 2025

U.S. farmers retained their post-election optimistic outlook to kick off 2025.  The January Purdue University/CME Group Ag Economy Barometer Index rose five points above December to 141  The barometer’s rise was primarily attributed to a nine-point rise in the Current Conditions Index.  The increase in the financial performance index signals that, on average, producers expect 2025 to be a better year than 2024.

The Farm Capital Investment Index, at a reading of 48 in January, was unchanged compared to a month earlier. The investment index continues to be notably stronger than last summer when it dipped to a low of 31, with this month’s index the second-highest reading of the last three years. Optimistic expectations for the future appear to be behind the strength in the investment index, but it remains to be seen whether  producers’ improved attitude translates into more farm machinery and new construction investments.

Compared to previous surveys, fewer producers in January pointed to lower crop and livestock prices as a top concern, which helped explain why producers felt better about the current situation.  The shift in attitudes was attributable in part to an improvement in crop prices between December and January.

Since 2020, each January barometer survey has included questions about farmers’ 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’s 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.

Farmers remain more optimistic about the future than the current situation, as the Future Expectations Index was still 47 points above the Current Conditions Index.  The Farm Financial Performance Index rose 14 points in January, a sign that producers expect this year to be better than 2024.

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