Farmers see slight improvement in May

While farmers are optimistic about conditions after 2024, high prices and interest rates are still hindering farm investment. 

The rising costs of human capital and water resources are exacerbating the pressure farmers already are feeling from high interest rates, Peter Young, president of Modesto, Calif.-based Belkorp Ag, told Equipment Finance News. 

“Everything’s rising,” he said. “We definitely see our core ag customers feeling the pinch right now.” 

The Farm Capital Investment Index rose 4 points in May to 35 from April’s eight-year low, according to the Center for Commercial Agriculture at Purdue University. 

As interest rates continue to make holding inventory difficult, small strategic decisions can make all the difference, Young said. 

“It’s a challenge we have to deal with, and we have to be smart about it,” he said. 

Though over three-quarters of farmers felt it is a bad time to invest, high dealer inventories are the main motivator for those optimistic about investment, according to the report that accompanied the index. 

Farm financial performance low 

Farm financial performance rose 6 points from April to 82. The climb comes partly from an increase in cash corn and soybean prices, the report stated. May’s reading is still 15 points lower than December 2023, which means 2024 could be more challenging than the year prior, but could improve in 2025, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue, told EFN. 

Livestock and crop sectors were affected differently, with livestock having more success, Langemeier said. 

“Your hay equipment and some of the demands for that is going to be a little different than demands for combines and planters,” he said. 

Future expectations recover 

Both future expectations and current conditions have risen since April. Future expectations climbed to 117 up from 106, while current conditions landed at 89 up from 83. 

The gap between the scores, Langemeier said, shows faith in the market after 2024. 

“Even though 2024 looks like a pretty tough year, [farmers] are expecting things to improve a little bit,” he said. “That’s certainly important when you’re thinking about land markets, when you’re thinking about cash rent and when you’re thinking about machinery and building investments.”