Farmer Sentiment Improves Dramatically

Farmer sentiment jumped in November as the Purdue University-CME Group Ag Economy Barometer increased 30 points to 145. Both the Current Conditions and Future Expectations indices increased in November, with the biggest improvement taking place in future expectations. The Future Expectations Index increased 37 points to 161.

The Current Conditions Index increased to 113. That’s 18 points more than October’s reading. November’s sentiment improvement pushed the barometer to its best level since May 2021, with expectations for the future also reaching their best level since April 2021. Some of the reasons behind the improvement in farmer sentiment include expectations for a future regulatory and tax environment for the agricultural sector that’s more favorable than expected prior to the November elections. The November barometer survey took place November 11-15.

Responses to the base questions used to compute the Ag Economy Barometer index were almost all more positive in November than in October. One-third of November’s respondents said they expect their operations to be better off financially a year from now, compared to 19 percent who believed that way in October. Thirty-four percent of farmers in November said they expect good times financially for the U.S. agricultural sector in the next 12 months compared to just 15 percent of respondents in October.

When asked to look ahead five years, more than half of November’s respondents said they expect U.S. agriculture to experience widespread good times – compared to 34 percent who believed that way in October. The increase in optimism spread to farmer’s investment outlook, with 22 percent of November respondents reporting it’s a good time to make large investments – compared to 15 percent of farmers surveyed who believed that way in October.

The sentiment improvement extended to farmer perspectives regarding capital investments, with the Farm Capital Investment Index increasing 13 points to 55. That’s the index’s best reading since May 2021. The shift in investment sentiment was motivated in part by expectations for better financial performance in 2025 compared to 2024. Each month the barometer survey asks respondents about their expectations for their farm’s financial performance in the upcoming year. For the second month in a row the percentage of producers who expect better times in the upcoming year increased.

To better understand how farmer sentiment is related to potential policy shifts associated with a change in presidential administrations, barometer surveys included several policy-related questions before and after the presidential elections of 2020 and 2024. Following the 2024 election, there was a big swing in farmer perspectives regarding environmental regulations impacting agriculture. In October, 41 percent of respondents said they expected the regulatory environment to become more restrictive in the next five years, with just 10 percent of respondents expecting a less-restrictive regulatory environment.

That stood in contrast to results from the November survey, in which just 9 percent of farmers in the survey said they expect more-restrictive regulations, while 55 percent of farmers said they expected environmental regulations to become less restrictive.

When asked about taxes, there was a modest shift in expectations from October to November 2024, with a much-larger shift in expectations when compared to results surrounding the 2020 election. More than half of respondents in the November survey said they think estate-tax rates will remain unchanged in the next five years, whereas in November 2020 just 28 percent of respondents said they expected estate-tax rates to remain unchanged.

EDITOR’S TAKE:

What a difference in attitude an election can make. It is interesting that almost immediately following the 2024 presidential election farmer/rancher expectations for the future took a dramatic jump. Their financial outlook improved to the point where they are now saying it is a good time to make larger investments, including buildings, equipment and trucks. So, now is a great time for your dealership to take advantage of this optimism. Why not plan an event to attract farmers/ranchers and their families into your dealership. Provide them with a special tour, emphasizing your top-notch parts and service department. As a thank you for attending your open house, why not give them a special offer on an oil change and inspection of their current vehicle. And, perhaps give them an opportunity to test drive one of your inventory trucks or SUV’s.