Apr 2, 2025

Farmer confidence falls due to ag trade uncertainty, policy fears

Record-high concerns about ag trade and farm policies have farmers feeling less optimistic, according to the latest results of Purdue University-CME Group’s Ag Economy Barometer survey.

The decline in outlook comes as the agriculture industry braces for the unveiling of additional tariffs by President Donald Trump, who has vowed “reciprocal” measures on imported goods from a range of countries with tariffs on U.S. goods.

Millions of dollars in fruit, berry and vegetable exports could be in the tariffs crosshairs, especially in regard to major trading partners Canada and Mexico. On March 4, Trump imposed a 25% tariff on Canadian and Mexican goods, only to pause that penalty two days later by issuing temporary exemptions for a wide range of goods from both countries. The exemptions, which applied to goods compliant with the U.S.-Mexico-Canada Agreement were to last until the reciprocal tariffs were announced.

The March survey of 400 farmers showed a 12-point decline in overall farmer sentiment to a reading of 140, with the slip in numbers driven by a 15-point drop in the Index of Future Expectations, and 5-point drop in the Current Conditions Index.“The drop in sentiment was influenced by falling crop prices since mid-February, along with increasing uncertainty surrounding agricultural trade and farm policy,” James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, said in a news release.

“Despite the decline, producers remained more optimistic about future conditions than the present, with the Future Expectations Index remaining higher than the Current Conditions Index by 12 points.”

Coinciding with the weakness in farmer sentiment, the Farm Capital Investment Index declined 5 points in March to 54, but, despite the month’s dip, last month’s investment index was still the second-highest reading recorded since June 2021.

The Farm Financial Performance Index also fell in March, dropping 8 points to 102. That number suggests producers, on average, still expect their farm’s financial performance to slightly exceed the level from a year ago, according to Mintert.

“The financial performance outlook was likely buttressed by expectations for strong financial performance among livestock operations, which helped offset weaker expectations for many crop farms,” he noted.

Trade concerns mount

In 2019 and 2020, the Ag Economy Barometer showed producers were optimistic that exports would grow over the upcoming five years, but that optimism began to erode in 2021 and has continued to fall since that time.

In March, producers’ expectations for U.S. exports in the next five years reached an all-time low in the survey, with the percentage of producers who expect to see exports fall (30%) nearly matching the percentage of producers who expect to see exports rise.

Since late 2022, barometer surveys have periodically included a question that asks respondents which policies or programs will be most important to their farm in the next five years. Prior to the November 2024 election, farmers in the surveys reported that they were more concerned about interest rate policy than trade policy.

“Since the November election, concern about trade policy has skyrocketed, with 43% of respondents, on average, citing it as the most important policy or program affecting their farm,” Mintert wrote.

“That compares to an average of 13% of farmers since the election who pointed to interest rate policy as most important.”

Coinciding with concerns about trade policy and the impact on U.S. agricultural exports is the potential impact on farm income.

The March survey included a question that asked farmers about their expectations regarding the likelihood that a program similar to 2019’s Market Facilitation Program (MFP) would be available to compensate for lower output prices attributable to a “trade war.”

Nearly two-thirds (65%) of respondents said they think a follow-up to 2019’s MFP program would be either “likely” (52%) or “very likely” (13%).

In a related policy question, 74% of farmers said that passage of a new farm bill this year was either “very important” (49%) or “important” (25%) to them.