Easing tariff concerns and expected federal subsidies boosted farmer sentiment in May, but low commodity prices and debt payment priorities continue to hinder equipment sales.
Purdue University’s Ag Economy Barometer rose 10 points in May to 158, its highest mark since May 2021, according to Purdue’s June 3 report, which comprised responses from roughly 400 farmers between May 12 and May 16.
The Future Expectations Index jumped 12 points to 164, and the Current Conditions Index rose 5 points to 146. The Farm Financial Performance Index also increased 8 points to 109.
Farmers’ outlook has been relatively positive this year as they anticipate substantial subsidies under President Donald Trump to offset potential adverse effects of tariffs. But the higher Current Conditions Index is a “head scratcher” because crop producers continue to grapple with low commodity prices and other challenges, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, told Equipment Finance News.
Langemeier said he suspects that the increase could be attributed to fewer farmers expecting U.S. tariff policy to negatively affect their income. In the survey, 43% expected damage to income from tariffs, down from 56% in April.
Plus, farmers are still receiving payments stemming from the American Relief Act of 2025, which includes a $10 billion provision for economic assistance to eligible crop producers. The U.S. Department of Agriculture expedited the program in March, with an application deadline of Aug. 15.
Commodities below are eligible for these per-acre payments:
Another positive for the agriculture sector: Financial stress is fairly low, with farmers mostly holding steady with debt payments despite tight cash flow, Langemeier said.
“Financial stress means that they’re going to have to sell machinery or sell land,” he said. “So, they’re not in that situation. That obviously would be very detrimental to asset markets.”
However, financial stress could rise later this year if interest rates remain elevated, he said.
Equipment purchasing still muted
The Farm Capital Investment Index, meanwhile, dropped 6 points in May to 55, with fewer respondents saying now is a good time to invest.
Farmers are especially unlikely to purchase more expensive farm equipment, including large combines, planters and sprayers, Langemeier said.
“It’s going to be harder to sell those large-ticket items,” he said. “Because it takes a bigger down payment, and they just don’t have it.”
However, livestock farmers, especially in the dairy and beef sectors, are faring well financially and are better positioned to make large capital investments, he said.
Farm equipment dealers are starting to benefit from this trend, Derek Weaver, sales manager at Leola, Pa.-based Agriteer, told EFN.
“Dairy, beef, chicken farmers are all doing pretty good,” he said. “That’s helped sales in those categories, like mineral hauling equipment. Hay equipment sales have also been good.”
Conversely, many corn and soybean farmers, who are reliant on exporting goods, are holding off on large equipment purchases amid ongoing trade tensions, he said.
