Farm financial performance and overall sentiment improved in January as some commodity prices strengthened, but President Donald Trump’s tariff plans raise questions about the industry’s future.
Purdue University’s Ag Economy Barometer reached 141 last month, up five points from December but four points below the more than three-year high it hit in November. The index, released Feb. 4, comprises responses from roughly 400 farmers and was conducted between Jan. 13 and Jan. 17.
The Farm Financial Performance Index rose 13 points in January to 111, partly driven by corn and soybean markets reacting “very positively” to lower yields last month, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, told Equipment Finance News. The index tracks farmers’ profitably and cash flow.
“There was quite a bit of strength in corn and soybean prices, and so that helped the financial performance index,” he said. “The other thing that happened is, in December, [the U.S. Senate] had the continuing resolution … [that contained] some money for agriculture. And it’s about $40 per planted acre for corn and $30 to $35 for soybeans and wheat.”
The Senate on Dec. 21 extended the 2018 Farm Bill through September 2025. The extension allows the Farm Service Agency to continue providing farm loans, disaster assistance and other support programs, according to the U.S. Department of Agriculture.
Capital investment plateaus as tariffs loom
The Farm Capital Investment Index stood at 48 in January, unchanged from December but considerably higher than August’s all-time low of 31. The index measures farmers’ willingness to make large farm purchases.
Lower interest rates and commodity prices contributed to an uptick in equipment finance demand at the end of 2024 as cash buying declined, Jay Darden, regional sales manager for the East Coast at Farm Credit Express, told EFN.
“I don’t think anyone is waiting for more interest rate cuts,” he said. “The percentage of [farmers] that financed was higher than in 2023 with less cash in the market.”
While investment activity has shot up since last summer, many farmers are still holding back from purchasing equipment, partly due to the potential impact of Trump’s tariff proposals, Langemeier said.
Forty percent of respondents said the agriculture industry is at risk of a trade war that could cause agricultural exports to significantly decrease.
“So many of our commodities today depend on the export markets,” Langemeier said. “So, anytime you talk about a disruption of that, even short term, can be problematic. … That uncertainty is certainly not making investment decisions easy.”
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