Farmer Sentiment improved in February with the Purdue University-CME Group Ag Economy Barometer reaching 152, up 11 points from the previous month. Michael Langemeier and James Mintert with Purdue’s Center for Commercial Agriculture note that an improvement in the current situation on U.S. farms was the primary driver behind the stronger sentiment among producers, as the Current Conditions Index reading of 137 was 28 points above January’s reading. The Future Expectation Index, changed just slightly at up 3 points in February to 159.
“This month’s rise in the Current Conditions Index capped a long climb from the doldrums of late summer and early fall 2024 when the index bottomed out at a reading of 76,” Langemeier and Mintert say. “A sharp crop price recovery in the last several months, which was augmented by expectations for receipt of disaster payments authorized by Congress, combined with strength in the U.S. livestock sector, contributed to producers’ improved appraisal of conditions on their farms and in the U.S. agricultural sector. Despite the big improvement in the Current Conditions Index, the February Future Expectations Index was still 22 points higher than the current index, suggesting that farmers expect conditions to improve further.”
JP Morgan’s Tami Zakaria notes that producers are “more optimistic on their medium-term growth algorithm.” Each February, the survey asks producers about their expected annual growth rate for the next five years. Zakaria highlights that this year, 50% of respondents indicated they have "no plans to grow" (37%) or "plan to exit or retire" (13%), slightly down from 52% last year. Since 2016, these categories have fluctuated between 43% and 61%.
“The 2025 survey revealed a notable shift: fewer producers expect slow growth of less than 5%, while more anticipate their operations growing by 10-15% or even more than 15% annually,” she writes. “This year, 19% of respondents fell into these high growth categories, more than doubling the 9% from 2024.”
Farm Capital Investment Index Jumps 11 Points
The Farm Capital Investment Index jumped 11 points to 59 in February. This month’s rise in the investment index pushed the index 4 points above November’s reading, which was taken just after the fall election. The February index was also the most positive reading of the investment climate provided by farmers since May 2021. Interestingly, this month, it was a stronger appraisal of current conditions that helped push the index up instead of stronger expectations for the future. The February Farm Financial Performance Index reading of 110 was virtually unchanged from the prior month’s value of 111. Although the index changed little compared to January, it still leaves the financial index up sharply compared to last fall when it dipped to a low of just 68.
Policy Concerns
Policies affecting agriculture are on the minds of U.S. farmers. Sixty-two percent of respondents to this month’s survey said that passing a new Farm Bill in 2025 is either important (25% of respondents) or very important (47% of respondents). In a follow-up question, producers were asked which policies or programs will be most important to their farm in the next 5 years. The top choice by February’s respondents was “Trade Policy” (44% of respondents), followed by “Crop Insurance Program” (18% of respondents). U.S. farmers’ concerns about trade policy was also evident when they were asked about the likelihood of a “Trade War” that results in a significant decrease in U.S. agricultural exports. Forty-eight percent of farmers in this month’s survey said they think a “Trade War” is either “likely” (29% of respondents ) or “very likely” (19% of respondents).
