Ag Barometer Insights: June 2025 Survey Results

Welcome to Purdue Commercial AgCast at Purdue University Center for Commercial Agriculture's podcast featuring farm management news and information. I'm your host today, James Mintert, Emeritus Professor of Agricultural Economics at Purdue University. And joining me today is my colleague, Dr. Michael Langemeier, who's director of the Center for Commercial Agriculture, and also a professor of agricultural economics.

We're gonna review the results from the June 2025 Purdue University -CME Group Ag Economy Barometer survey. Each month we survey 400 farmers across the U.S. to learn more about their perspectives on the ag economy. This month's ag barometer survey was conducted from the ninth through the 13th of June.

Michael, the barometer dipped this month. It went from 158 in May to 146. That's a 12 point drop in the month of June. Um, but despite the decline, that still leaves the barometer substantially higher than it was this time last year. It's up about 41 points compared to where it was this time last year. So keep that in mind when you think about the decline. It was a significant decline, but still way stronger than what we were seeing last year at this time.

The Current Condition Index only fell two points to a reading of 144. That still leaves that index 54 points higher than it was a year earlier. And the Future Expectation Index did drop pretty sharply, and that's what drove the decline the barometer itself. So the Future Expectation Index was down 18 points to 146. Once again, though, that still leaves that index 34 points higher than it was in June of 2024.

So, Michael, before we started, you kind of mentioned that you were a little bit surprised at these results. Maybe you can kinda share that with us. I'm not necessarily surprised that the, the barometer drop, like you said, is still relatively strong compared to last year and very strong compared to last September and October.

Uh, and so that, that's not surprising that the barometer itself adjusted, but what I was surprised that the Index of Future Expectations fell 18 points to 146 and the, uh, Index of Current Conditions only dropped two, and they're very similar. We have to go back quite a few months in order to see that a case where the Index of Future Expectations is similar, uh, to the Index of Current Conditions.

We've been riding this wave here probably since last August or so, where the Index of Future Expectations was substantially above the Index of Current Conditions. And the Index of Current Conditions, uh, this is kind of an, an interesting year when you think about net farm income, to say the least. Uh, we've got some positives. We've got some negatives. We've got some positive, particularly in the beef sector, record prices, uh, recently.

Uh, and, and so there's some positives in, in the beef sector and, and, and the livestock sector in general, but the crop sectors is, is having a tough, another tough year, or at least it's, it's, uh, projected to have a tough year. Uh, '24 was not particularly great year, uh, for crop producers, and it looks like '25 is gonna be very similar. And so that's what makes me a little bit surprised that that Index of Current Conditions is about the same as that Index of Future Expectations.

So what do you think drove the decline in the Index of Future Expectations? You know, is it, is it loss of optimism with respect to exports? That's one of the things we've been talking about. I think it's policy uncertainty. I know that's kind of a cop out, if you will, but if you think about it, we've still got some uncertainty related to the Farm Bill, even though as you said before the podcast, that does seem to be moving through, uh, in a, in a reconciliation bill.

We've still got uncertainty there and we've also got a lot of uncertainty with trade and tariffs. And so, uh, when you have an uncertain policy environment I think that negatively impacts that, that, that Future Expectation Index.

Yeah, that's a good point. So the Farm Financial Performance index did decline this month. It was down five points to a reading of 104. That still leaves that index 19 points higher than it was this time last year. And again, the Farm Financial Performance Index decline, that kind of correlates with what was going on in that Current Condition Index. The Farm Capital Investment Index, surprisingly rose five points to 60. That nearly matches the April reading of 61.

The percentage respondents saying it's a good time to invest this month rose to 24%. That's up from 19% in May. So Michael, you think about Farm Financial Performance and the Capital Investment Index, what's your take? This Farm Capital Investment Index, as, as we, as we've said before, uh, went up rather sharply last fall, and it's kind of remained there.

I mean, it, it was go, it was right around 30 to 40 for a long time, from late '21 all the way, uh, to mid to maybe going into the fall of '24. And then all of a sudden, uh, it, it jumped, uh, to around 50, 50 to 60. And, and, and so the reading of 60 is very consistent in what we've seen in the last few months.

Uh, what, what's exactly on, on an individual's minds, I think that I think, like you said, the fact that Index of Current Conditions is, is relatively strong right now is probably, is probably the same reason why we're seeing this index slightly higher, uh, than what we saw last year. I agree. I think those two are highly correlated at this point in terms of, uh, capital investment being driven by perceptions about cap, uh, current conditions.

When you look at the responses to the questions itself, the, that Capital Investment Index is based on a question that says, 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? The thing that kind of stands out is twice as many respondents this month said this was a good time to invest as felt that way a year ago. This month, 24% of the people in the survey said they think it's a good time to invest.

A year ago that was only 12%. Uh, the percentage saying bad time has also fallen over the course of the last year. So there's that sentiment perspective about this being a good time. But then we've been asking a follow up question that says, what are your plans for farm machinery purchases in the upcoming year compared to a year ago? Despite the, uh, improvement, the Capital Investment Index, which is about the sentiment about, uh, making investments.

When we ask people more specifically about farm machinery, the percentage of people who say that they plan to pull back and reduce their investment or their expenditures on farm machinery actually rose this month. That was 54% of the people in the survey said they were gonna lower their investments in farm machinery. Last month, that was 48. Alright, so put that whole package together for me, Michael, and explain it. That's very diff difficult to do.

Uh, the only thing I can think about what might be happening here is the, I I, with Farm Capital Investment indexes up a little bit, so they're a little bit more optimistic that this might be a good time. Maybe they're in, wait and see. Uh, you know, particularly for crop production, you know, the, the crop look fairly good across the Corn Belt. Uh, there's always spots where they, where they don't look so good, but we got a long ways to go yet, uh, w with this year's crop.

And, and we don't know what the prices are going to be and we never do. But there's, there, there's just as much uncertainty this year as every year. And so maybe they're in a wait and see attitude. Let's see how, what this year looks like before we actually, uh, uh, commit, uh, to buying machinery and, and, uh, building, building more buildings. Yeah, that's sort of my take as well.

We're, we're picking up this sentiment that this could be a good time to make some investments and that'll largely when we ask some other questions that largely seems to relate to the fact that people think that it's a good time to make a deal because inventories are pretty large and, and dealers might be more willing to negotiate, um, but they're not willing to actually step out and, and write a check, uh, and make that investment decision that, that commitment to invest.

Because one of the things that I did some, I did some work recently using the University of Minnesota FINBIN data. And there's a very strong correlation between net cash farm income and, and asset purchases, particularly machinery. And so this year turns out to be a good year, uh, from net, net cash farm income, uh, i.e. stronger than I think it's going to be, than, than we probably see more investment. Yeah, that would be the big if, right? That's the big if.

So the Short -Term Farmland Value Expectation Index, which is based on a question that says, what do you think is gonna happen to farmland values in your area over the next 12 months. That index did decline, but not much down four points compared to a month ago. So that reading is at 120, that still leaves the index five points higher than it was this time last year. If you go back two years ago, it was at 126.

You really have to go back three years before the index was significantly stronger than what we're seeing today. And, you know, when I look at that one, Michael, I kind of think it's expressing some cautious optimism about farmland values. If you look at the question that the actual responses to the question that the index is based on, you can kind of get a little bit of a picture of what's going on. The percentage of producers who said they expect values to rise fell from 37 to 32%.

The percentage of producers who expect values to hold steady rose from 50 to 56%. So I think what we really saw is some people who maybe would've a month or so ago said they thought value was gonna go up, have shifted over to saying, well, I think it's gonna hold steady. Yeah, this is a very interesting result.

And I think it's, I think it's tied to everything we've been talking about with that Index of Current Conditions, if you expect that Index of Current Conditions to be relatively strong, if their sentiment's relatively strong with regard to that, they're gonna be somewhat optimistic when it comes to land values. Yeah. So we, we didn't pick up any real change in the percentage of people who say they think value's gonna go down. It went to 12%.

So the, the move was really about a little less confident that values are gonna increase, I think they'll hold steady. So maybe a little less optimistic than we were a month ago.

So we mentioned trade earlier, and we've been asking this question since the beginning of 2019. Uh, and that really helps us get a perspective on what people are thinking about with respect to trade. The question is, over the next five years, do you think ag exports are more likely to increase, decrease, or remain about the same and, you know, the responses, these last couple of months have been pretty doggone volatile. Uh, 41% of producers this month said they expect ag exports to increase.

That's down from 52% who felt that way a month ago. But you know, if you go back, uh, for example to to March, you really could see some changes there. So we saw one month bump in the percentage of people who thought exports were gonna increase. That was in May. We've backed off of that a little bit this month, but it's still an elevated level compared to where we were previously.

And then when you look at the percentage of people who say they think exports will actually decline, you know, you go back to March, 30% said they thought exports were gonna decline. This month it was only 16%. So. That probably explains some of that decline in future expectations, do you think? I, I think it contributes mightily. Uh, you know, you never can say it explains all of it, but, but I think it goes a long ways in explaining, explaining part of that drop or a major part of that drop.

So, just for a little bit of perspective, and for listeners that haven't had a chance to see the chart, you can download this chart from our website, but you can see this change in attitudes has taken place since 2019. In 2019, a high percentage of respondents said they thought exports would increase over the next five years. Depending on the month, it was between 50 and 70%, and most of the time it was between 60 and 70%. And then we'd have this multi-year decline in optimism about exports.

And now all of a sudden here, these last two or three months, we've got volatility. Are you surprised at the volatility? No. When there's that much uncertainty with trade and tariffs, you're gonna have volatility. Yeah. And that's what's really generating this. So my guess is this will continue to be volatile depending on most recent announcements for the next few months. So we asked, uh, a question back in 2020 and we repeated that question again here, these last two months.

And the question is, how strongly do you agree with the following statement, quote, free trade benefits, agriculture, and most other American industries, unquote. And the results in 2025 versus what we received in 2020, and we asked it three times in 2020. We asked it in October, November, and December of 2020. Now we've asked it here in May and June of 2025. And there's a difference between the way people feel about free trade in 2025 versus 2020.

Um, support for free trade among ag producers has clearly waned. From October to December, 2020, an average of 49% of the respondents to the survey said they strongly agreed that agriculture benefited from free trade. In May and June of 2025, that percentage fell to an average of just 30%. That's a significant drop. It, it sure is. And, and, uh, I. I don't even know what to say about this.

I mean, if we asked, we asked a economist the same question, uh, those that would strongly agree would be close to a hundred percent. So, uh, uh, it is what it is. But I think, I, I think all, all the rhetoric related to trade and tariffs is, is really, uh, has really caused some confusion, if you will, or some uncertainty, uh, about the relative importance of free trade. Yeah, historically agriculture has been a beneficiary of, of improvement in trade, uh, terms and trade conditions.

So it is interesting to see this turnaround and, and it, I, it speaks to the idea that the administration has hit on a topic that, that many people in agriculture are looking on favorably. Another question we've been asking just this year, we started this in March of this year, what impact do you expect the U.S. government's imposition of tariffs on imports will have on your farm's income in 2025?

Overall, there was less concern about a negative impact on income in the May and June surveys than we picked up in the March and April survey. So March and April, people were more concerned that this could have a negative impact on income. There's still a lot of concern out there in May and June. I don't wanna downplay that too much, but you can see a shift in the last two months versus March and April.

We didn't ask, we didn't ask this question this last, this last month, but we have asked a question, uh, if we, if we do, uh, if we do have trade issues, do you expect payments? And, and overwhelmingly when we asked that question a a few months ago, people said yes. And so I think that's part of what's going on here. Yeah. And that's consistent what the administration has said as well. Yes. So there's been good reason to think that way.

So, um, so then the last question, and we, this surprised some people, but We've asked three times in a row now, and the results have been pretty consistent, do you expect the increased use of tariffs by the U.S. to strengthen or weaken the U.S. ag economy in the long run? So we asked it in April, we asked it in May, and now we've asked it in June. And this month, 63% of the people in the survey said that in the long run, they think it'll strengthen the U.S. ag economy.

That's down a little bit compared to April and May. And April and May, it was 70%. You know, if I combine those three across the board, Michael, I think you wind up with about two thirds of the people in the survey, uh, across three different surveys are telling us that they think in the long run, the increased use of tariffs will actually strengthen the U.S. ag economy in the long run. Yeah, I, I'm not gonna make a big deal out of the 7% drop from May to June. I mean, that is a drop.

Uh, but, but like you said, I mean, when you, you know, we average across those two thirds of the people, uh, think this is gonna strengthen, uh, the U.S. agriculture economy. And, and even though the Index of Future Expectations did drop, it's still relatively high. And I think this question right here explains why it's relatively high.

Yeah, it's, uh, it's, it's an interesting result and it's one that, you know, we talk to a lot of ag economists and I don't know of any ag economists who actually agree with this. There probably is somebody somewhere, but I haven't run across that person or that faculty. At best, they'd be in the uncertain category.

Yeah. So, uh, clearly, you know, if you think about what's going on here, I think what people expect that are responding this way, I think that agriculture has been disadvantaged by various tariff barriers and, and in some cases non- tariff barriers that have impeded trade. And they're expecting these policies to lead to, um, alleviation of those barriers, right? Yes. I I think that's what's driving this. Yeah, I think so too.

From my own perspective, there may be overestimating how much impact those barriers have had, but in some cases, and in some countries and in some commodities, it has been significant. So it's an interesting result. We're gonna continue to ask this question going forward.

Um, looking ahead to next year, what are your biggest concerns for your farming operation? You know, we've been asking this question now for, uh, what two years. I don't have the full, uh, chart on the, uh, in front of me at the moment, but long time and it really hasn't changed. Higher input cost. Right. And I still think that's related to the fact that for a lot of folks, the anchor point for input cost is really pre COVID.

And we've seen such a dramatic runup in so many production costs since then. Especially things like farm machinery, um, and some of the other inputs as well, but especially machinery. That continues to be what people focus on. Lower crop and livestock prices is number two. It's at 28% this month. That is up compared to last month, and I think the highest reading we've received for that, uh, category this year. Uh, but.

I keep waiting for the lower crop in livestock prices to be a bigger worry than high input costs, but it just doesn't seem to happen. I, I think it's probably not gonna happen for a while as long as we have at least 25% that are livestock producers in there. I mean, they're not really facing low, low, low prices right now. So I think that's part of what's going on here. But if you think about, if you think about the, the, the, the tight margins right now.

Uh, you can, you can attribute a lot of the tight margins to relatively high breakeven prices. Uh, yes, corn and soybean prices are not good, but compared to 2014- 2019 period, they're still not as bad as that period. And so I, I think I. I think high input costs are really on people's minds, and so I, I'm not surprised that this has been stubbornly, uh, between 35 and 40% for a long time.

We started asking a que a, a question similar to this coming outta COVID, and it's been very consistent ever since we, ever since we started asking this question that they're worried about these high input costs. Yeah, that's a good point. If you just look at a price chart, current prices don't look that bad from a historical perspective, but the problem is it costs so much to actually produce whether, whatever commodity you're looking at. Right.

We asked this question last month. We've repeated it again this month. Do you normally hire non-family members to work in your farm operation? Uh, last month, 51% of the people in the survey said yes, they did. This month it was 56%, so a few more. Uh, people said they hire non-family members, uh, to work on their farm than, than we picked up last month. Then the follow up question that went to people who said that they did hire non-family members to work on their farm.

We asked them, do you, are you having, or do you expect to have difficulty hiring adequate labor in 2025 for your farm operation as a result of the U.S. administration's policy to reduce immigration. And, you know. Yeah. Two different ways of looking at it. Um, about 20%, so one out of five of the people who say that they hire non-family members to work for 'em, say they're having either a lot of difficulty or some difficulty. 80% say at least so far, no difficulty.

And those results aren't too much different than last month. I think, um, it was right around 79 or 80% of the people who last month who said no difficulty. Given. So, which, which of those two buckets do you wanna focus on? Given who we sample, uh, we have dairy and swine producers in there. That's the two that come to my mind right away. As, as, as, as producers that probably have quite a bit of hired labor. Uh, that, that we survey. But we don't have vegetable producers.

We don't have specialty crop producers. Uh, and, and so, and so a lot of the, the, a lot of agriculture that has a lot of hired labor are not part of this survey. And so the reason why I, I, I start with that is the fact that one out of five have some difficulty or a lot of difficulty is a problem. For this group of farms. Yeah, that, I think that's a good way to look at it. And that's kind of my perspective as well.

And so for listeners just to know, so you know a little more about how we do the survey. The survey targets people who are producers of the major ag commodities. And on the crop side, uh, that's corn and soybeans, wheat and cotton. And on the livestock side it's beef, uh, dairy and swine. And we do wind up with a few people in there who probably do produce specialty crops. But the reason they're in the survey is because they have the, one of the other They don't focus on that necessary.

Yeah. They have one of the other enterprises. So we don't, we do not intentionally survey people who are specialty crop producers. Um, and we do have, as you mentioned, the dairy and swine producers in there, but they might, uh, let's see, dairy and swine would make up, uh. 7-8%. Yeah. Less than 10% survey. It's a relatively small percent. Yeah. Yeah.

That wraps up the highlights of this month's survey. You can get the full report on our website: purdue.edu/agbarometer. And of course, you can always listen to the Purdue Commercial AgCast for not only the Ag economy barometer updates, but a variety of other farm management and news topics. So with that, I want to thank my colleague, Dr. Michael Langemeier for joining me on the broadcast today. And on behalf of the Center for Commercial Agriculture, I'm Jim Mintert.