Farmer sentiment improved in October, but remained below pre-pandemic levels, as higher prices, yields and election expectations failed to overcome negative sentiment around overall lower income and high farm input costs.
The Ag Economy Barometer’s 115 value remains below the 137.5 average and below October 2019’s 136 reading, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, which released the index Nov. 5, told Equipment Finance News.
“Crop prices were up slightly, the key word there is slightly … so that probably didn’t contribute a huge part of it, but one of the things that’s happened is producers also had pretty good yields for the most part across the Corn Belt,” he said. “Usually when that happens, they’re usually a little bit more optimistic, even if the prices are lower with those higher yields.”
Still, yields are limited in some parts of the country following Hurricane Helene’s and Hurricane Milton’s impact on the East Coast, Jay Darden, regional sales manager for the East Coast at Farm Credit Express, told EFN.
“We’ve got pockets with excellent yields, and then we’ve got pockets that were literally destroyed by hurricanes and excess rain,” he said. “We’re waiting to see if there’s any disaster payments and how far that goes.”
In addition to improved crop price and yield performance, sentiment related to the presidential election likely improved the outlook for farmers, Langemeier said.
“Sometimes around elections, you see a bump in sentiment, depending on what they think is going to happen after the election,” he said.
While the survey was conducted before the election, it was close enough for farmers to form expectations, he said.
Farm equipment purchases
Meanwhile, the desire to buy farm equipment mirrors that of January, according to the Center for Commercial Agriculture at Purdue.
Fifty-five percent of farmers expect farm machinery purchases to be less likely next year compared to a year ago, the same as January and down compared with the 2024 peak of 69% in September, according to the Center for Commercial Agriculture. Only 6% of farmers have more likely to be higher purchase expectations, the same as in January and up compared with 5% in August and September.
The Farm Capital Investment Index, which tracks farmers’ willingness to make large farm purchases, improved to 42, up seven points year over year but well below pre-pandemic levels, a trend likely to continue for years, Langemeier said.
“The low net returns in 2024 are going to haunt the industry for a while,” he said. “Until those returns look a little bit better, and we’re not drawing down working capital, it’s going to be tough for people to go out there and spend a lot of money on new machinery.”
Farm Financial Performance Index hits 2024 high
While farming and the farm equipment industry has experienced an overall poor performance so far this year, October hit a high for the past 12 months on the Farm Financial Performance Index at 90, down two points year over year, as farmers look to a brighter future, Langemeier said.
“Looking at financial performance today compared to last year, that was still pretty dismal,” he said. “2024 is still not looking like a real banner year, but it’s pretty obvious that producers think the future looks a little brighter than today.”
Low net cash flows and high interest rates are keeping farm financial performance low, Darden said.
The farm equipment market “is going to be depressed or slower in 2025 than it was in 2024, and I don’t anticipate those markets to normalize until at least mid-2026,” he said. “We’ve got new leadership in Washington, and there is some optimism surrounding that, and then there’s some concern about tariffs and how that might affect health, so I would say that’s the question mark hanging out there.”
