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Audio Transcript

James Mintert: Welcome to Purdue Commercial AgCast the Purdue University Center for Commercial Agriculture’s podcast featuring farm management news and information. I’m your host, James Mintert, Emeritus Professor of agricultural economics at Purdue University. And joining me today is my colleague, Dr. Michael Langemeier, director of the Center for Commercial Agriculture, and also a professor of Ag Economics here at Purdue. We’re gonna review the results from the May, 2025 Purdue University-CME Group Ag Economy Barometer survey of farmers from across the nation. Each month we survey 400 farmers across the U.S. to learn more about their perspectives on the ag economy.

 

[00:00:33] Overview of May 2025 Ag Economy Barometer Results
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James Mintert: This month’s Ag Barometer survey was conducted from the 12th through the 16th of May. And Michael, the barometer rose 10 points this month to 158. That’s the highest barometer reading we’ve gotten since May of 2021 and continues the, the trend we’ve had of strong barometer readings ever since the election last fall, and, and to some extent, maybe dating back to October.

The Current Condition Index rose five points to 146. That’s the highest Current Condition Index since December of 2021. And of course, the the biggest move was in the Future Expectation Index. It was up 12 points to 164. That’s the highest Future Expectations Index since April of 2021.

So the biggest reason the barometer went up was because people became more optimistic about the future, but they also became a little more optimistic about the current situation on their farms and, and in the U.S. ag economy.

I wasn’t surprised that the barometer went up. But maybe the magnitude of the jump was a little bit surprising.

Michael Langemeier: Yeah, I’m in the same camp. I wasn’t surprised it went up. During the week we were asking this, there was some good news regarding tariffs with respect to China. I don’t exact exactly what the timing was there, but it certainly was during that week. And so I think that played into the, to the optimism, uh, we, we saw in, in this month’s, uh, this month’s reading. I’m still surprised, however, that the Index of Current Conditions is as strong as it is. That also went up five points. Um, so that was, that was a little surprising to me.

James Mintert: Yeah, that’s sort of my take and, and again, this administration continues to have these short term, um, delays in implementation of, of tariffs. And that seems to give us this bounce in terms of expectations, not just in our index, but also in in other indexes. Right. You see it in the stock market, elsewhere. So you get these very short run responses and I think we definitely picked up some of that this month.

[00:02:33] Farm Financial Performance and Investments
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James Mintert: Um, the Farm Financial Performance Index was up eight points to 109. That’s just two points lower than it was back in January. And again, it’s the highest index reading since December of 2022. And you know, when you look at the chart, you can really see how that change has taken place. Going back to last fall, you go back to September, that index was at 68 and now we’re at 109. So we’ve really seen this dramatic improvement in that Farm financial performance Index. Some of that relates to 2025 expectations versus 2024 versus, you know, last fall people were comparing 2024 to 2023, I think. But still, um, I don’t know, a little, a little optimistic, isn’t it?

Michael Langemeier: I, I think so. But, but, but I do think ’25 is gonna be as good as ’24. And so, and so when you, when I look at, when I look at, uh, budget projections, for example, I, I think it’s fairly consistent with the budget projections.

James Mintert: Okay. Uh, and you’ve said that before. I, I guess, um, I, I, well, overall, I just continue to be a little surprised at the optimism we’re picking up.

Michael Langemeier: It doesn’t necessarily mean this is gonna be a good year, but it, what that tells me is they think it’s gonna be similar to ’24.

James Mintert: Yeah.

Michael Langemeier: And, and I would agree with that.

James Mintert: And that’s how the question is phrased. So that’s, that’s a good point.

Uh, the Farm Capital Investment Index did fall this month. It fell six points. But that was still pretty strong relative to the last three years. You go back this time last year, we were at 35. 2 years ago, we were at 37. Three years ago we were at 35. You really have to go back four years to see the kind of values that we’re seeing on this index right now. Um, in fact, going back to 2021, you’d have to find a May reading higher than this year’s reading.

So, um. The fact that it fell a little bit isn’t too surprising to me. I guess the key point is it’s still above what I consider to be the trading range that the upper bend of that trading range for the better part of three, three and a half years was about 50, and we’re still above that. So I guess I don’t see a big change there. What, what’s your take, Michael?

Michael Langemeier: Yeah, I don’t either. I mean, I, you know, this, this thing, this thing does a little seesawing. Back and forth, but again, the surprise is that it’s as high as it is.

James Mintert: When you look underneath to figure out why the index changed. The percentage reporting good time to make large investments fell from 25 to 19%, while the percentage reporting bad times was unchanged to 64%. So that’s what caused the index to move. You did see a little loss of optimism about this being a good time.

I dunno, maybe a little bit surprising given the bump we saw in future expectations, uh, those two, maybe I would’ve expected to see a little stronger correlation, but still that’s, that’s what took place there.

Um, the interesting thing is if you look at the last several months and look at the question that says, what are your plans for farmer senior purchases in the upcoming year compared to a year ago? There has been a little bit of a drift there and going back to February the percentage of people who expect to reduce their farmer stream purchases in the current or in the upcoming year compared to a year ago, has been drifting lower. Back in February it was 54% we’re gonna pull back, uh, been drifting lower the last couple of months. This month it was at 48%. The percentage saying that they’re gonna hold their investments about the same has climbed from about 36% back in February, uh, to 43% these last two months. So in a way I think that’s a little bit consistent with the strength we’ve seen in the Capital Investment Index, don’t you?

Michael Langemeier: Yes. I, I do think, I do think that’s consistent. And, and the, the May, the may numbers were very similar to the January numbers. I, I, I found that rather curious. But, but they were, I. And so it, it looks like we are a little more negative in February, March and April. And now they’re just a little bit more positive, uh, you know, consistent with where they were at in January.

James Mintert: So it remains to be seen if that’s gonna have any impact on things like tractor sales. So far, certainly in the first quarter this year that didn’t, was not the case. Um, longer term it’d be interesting to see what, what takes place there and whether or not there may be is a little bit of moderation there.

[00:06:33] Farmland Value Expectations
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James Mintert: Um, if there’s one number on the survey this month that surprised me the most, it’s probably this one, Michael, and that is the Short-Term Farmland Value Expectation Index. It jumped 14 points to a reading of 124. Um, that’s the highest index for that since a little over a year ago, March of 2024. And, you know, I, I’m just kind of surprised that people’s expectations for farmland values would change that much in one month given the news that we had and, and what took place. How about you?

Michael Langemeier: Yeah, usually this is very consistent with the Index of current Conditions. It was up slightly, so I would, I would’ve expected this to be up slightly, but not as much as it was. I mean, that’s a big jump.

James Mintert: Yeah, and if you look at the question that that index is based on, which is basically asking people about their farmland price expectations for the next 12 months. The percentage of producers who expect higher farmland values this month jumped from 25% in April to 37% this month. Um, and that shift occurred from, with people moving away from the, uh, expecting values to hold steady category into that, uh, expecting values to increase. Uh, the percentage of people expecting values to hold steady dropped from 60 to 50%. So it’s not like people flipped from negative to positive, they flipped from percentage holding steady to becoming more optimistic. So I guess maybe in that context it’s a little more understandable, but still. A pretty big jump. Uh,

Michael Langemeier: Yeah, really big jump.

[00:08:05] Ag Exports
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James Mintert: Um, we’ve been asking this question all the way back to 2019, and we’ve talked about it not every single month, but periodically here about the lack of optimism people have about ag exports. So the question is, over the next five years, do you think ag exports are more likely to increase, decrease, and remain about the same? And for some time, people have in over time become less and less optimistic about exports increasing. That changed this month big time. Uh, the percentage of people who say they expect exports to increase over the next five years in May jumped to 52% up from just 33% a month earlier. That’s the highest percentage expecting exports to increase since November of 2020.

Michael Langemeier: This was a truly amazing result. I did not expect this. I expected to be a little bit more positive, but not this much. And just, just to put this in perspective, if I’m reading the chart right, um, uh, Jim, there was only one time during the Biden administration where the increase, the, the people that said it was gonna increase was over 50%. One time, uh, and, and, and now we’re there today.

And, and, uh, and, and, and it just goes back to what we’ve been saying before. I think we’re in a more challenging environment for agriculture exports than quite a bit of the time during the Biden administration. But maybe that’s just me.

James Mintert: Well, the interesting thing is this, this dramatic turnaround because if you, again, if you look at the chart that we’ve got in our report and, and in the, uh, online chart library, you know, you can see there was this long term downtrend dating back to 2020 with respect to people becoming progressively less optimistic about growth in exports, which historically been an engine of growth for U.S. agriculture. And this is the most dramatic one month turnaround in that data set.

So it’s, it’s, I guess what it demonstrates to me, Michael, is that we are in an environment where sentiment on a variety of topics is heavily influenced by the headlines of the day.

Michael Langemeier: I think that’s a good way to put it.

James Mintert: Um, and we’re seeing that in other markets as well. I mean, the stock market is certainly evidence of that as well. So people are very influenced by whatever the headlines are. And uh, as you pointed out earlier, this was a week when people became more optimistic about trade and, and more optimistic about markets in general.

[00:10:28] Trade and Tariff Expectations
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James Mintert: So we included some questions this month to try and learn a little bit more about people’s perspective on, uh, free trade in general and tariffs. And so some of these were questions that we originally posed back in 2020, so it provides kind of an interesting comparison.

Uh, so the first question is, how strongly do you agree with the following statement, free trade benefits agriculture and most other American industries. So a majority of producers across the board, we asked this three times in 2020. We asked it in October, November, and December of 2020, and now here in May of 2025. A majority of producers say they think free trade is beneficial. But when you compare the results this month to 2020, a higher percentage of producers say they disagree that free trade is beneficial.

So for example, in May of 2025, it was 18% who say they either disagree or strongly disagree. Versus seven to maybe 12% who felt that way in 2020. And so to me that’s the difference between these, these, what we picked up in May versus what we’ve picked up back in 2020. There’s not as much agreement that free trade is beneficial. Or stated another way, there’s, there’s more people saying it’s, it’s not beneficial.

Michael Langemeier: Yeah. There is more people, certainly, like you said, there’s more people think, uh, strongly disagreeing or disagreeing with this statement, 18% compared to 12% back in November of 2020. And, and lower than that in October and December of 2020.

But really stood out to me. One of the things that really stood out to me is 28% strongly agreed with this statement in May. That was close to 50%, uh, when we asked this in October, November, and December. And so there’s, there’s certainly, there’s certainly a much fewer people that strongly agree with this, with this statement.

Now we specifically use free trade here and not fair trade. I think it’s important to point that out ’cause I do think there’s different connotations between those two terms.

James Mintert: Yeah, that’s a good point. And, and I agree with you. I think when you look at the chart that is. Quite, quite, uh, noticeable. The fact that we have a much lower percentage who strongly agree.

Um, so we’ve been asking this question now for the last couple of months. This is the third time. What impact do you expect the U.S. government’s imposition of tariffs on imports will have on your farms income in 2025? And compared to March and April, fewer producers in May said they expect a negative impact on farm income from the U.S.’ use of tariffs.

Um, you know, if you look at the numbers, I think this month it was 43% who either expect a very negative or a negative impact. Last month it was 56%. When I say last month of April, uh, in March it was 57%. So, um, fewer people are worried about the impact on their farm’s income than what we were looking at before. It’s still a large number. It’s, but it’s less than half.

Michael Langemeier: And this certainly helps explain, uh, what happened to the, in the Index or Current Conditions.

James Mintert: Yeah, it picks up some of that improvement in optimism.

[00:13:35] Farmers Biggest Concerns
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James Mintert: We’ve been asking this question for quite some time, so I think it’s worth sharing. Looking ahead to next year, what are your biggest concerns for your farming operation? No big change this month. I mean, number one continues to be high input cost. This month it was 37% of the people in the survey said that was their biggest concern. Number two is lower crop in livestock prices at 23%. Um, you know, we did pick up a few more people worried about interest rates, uh, which I think is consistent with what’s taken place in the markets, right? Uh, with some, some jumps in interest rates.

People a little more worried about that. Availability of inputs was at 8%. Um, that’s been as low as five. Uh, it’s down slightly from last month. You know, we’re, we’ve been picking up some concern there. A little bit more on the environmental policy side. 9% this month. I think last month it was around 6%. So, uh, no big shifts there, but, uh, what’s your take?

Michael Langemeier: Yeah, I know no big shifts there and higher input costs remains the number one, like it has been for months.

James Mintert: Yeah, I think, uh, well the one to watch in this list is probably rising interest rates.

Michael Langemeier: Yes.

James Mintert: And maybe availability of inputs. Would you agree with that?

Michael Langemeier: Yes, and it, and just the fact that we, we, we have to remember what this looked like prior to COVID. We didn’t ask this question as frequently. We did ask questions similar to this prior to COVID. Prior to COVID, the in input cost would’ve not been high on that list. I mean, ever since, ever since COVID, uh, in input costs, higher input costs and interest rates have been really important. You know, interest rates obviously more recent, uh, but, uh, those, those remain the, the, uh, the two of the most important items that are, that are concerns to producers.

James Mintert: Yeah.

[00:15:17] Farm Bill Policy
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James Mintert: So we’ve been asking people periodically about how important it is that a new farm bill be passed, uh, in the current year. And this time it’s obviously 2025. Um. A two months in a row, just over half of producers have said the passage of a new farm bill is either important or very important. This month, I think it was, 71%. I think last month it was either 69 or 70%. So very close.

So a, a substantial majority of producers think it’s important that a farm bill be passed. And then this month, the new wrinkle was we did ask people about PLC reference prices. So in both with respect to both corn and soybeans, we said in a new farm bill, do you expect the PLC reference price for corn, which is currently $4 and 26 cents per bushel, to be unchanged, increased, or reduced. And we asked the same question with respect to soybeans. Uh, do you expect the PLC reference price for soybeans, which is currently $9.66 per bushel to be unchanged, increased, or reduced? And when you look at those results, well, I’ll let you summarize. What, what do you think?

Michael Langemeier: I think they’re consistent with the, with the, with the, with the information coming out of Washington, DC uh, some of the, some of, some of the, the, the bills, uh, that are working their way through Congress. I think they’re consistent with, with that. Um, uh, but, but I, I wanna go back to the farm bill question.

Given the policy uncertainty that we’re currently seeing, I’ve been telling people, reporters and, and other, you know, others, uh, that are interested in the Ag Economy Barometer, that I can see why they think this is really important. We need that safety net. We need that multi-year safety net to kind of mitigate, uh, some of the policy uncertainty we’re seeing with respect to monetary policy and trade policy.

James Mintert: Yeah. Stated in another way, they’re looking for a backstop. Right?

Michael Langemeier: They’re looking for a safety net.

James Mintert: Yeah. And what do you make of, of the reference price responses? So to summarize, 39% said they expected the corn reference price to to increase, and 43% said they expected to see the soybean reference price increase. I’m gonna round those off and say roughly four outta 10 people, uh, think that those two prices are gonna go up in the upcoming farm Bill.

Michael Langemeier: What’s really interesting about that, if, if $4.26 corn, for example, uh, we’re still a little bit below the, the, the average corn price since 2007, but not that much below. I think if, I think the average corn price in the U.S. since 2007 is about $4.50. And so to me, we’re getting awful close to that average price and back in my, my policy class is, you gotta be careful there on how you, how you, uh, how do you incentivize, you know, producing certain crops. Uh, and, and particularly when you compare, uh, compare these two, I think, I think people could, could, could argue under the, under the old farm bill that the reference price for soybeans is probably too low compared to corn. And so to me, you can make a stronger case for the increase in, in soybean prices than corn prices. But I, I think you’re gonna, I think you’re gonna be mixing up signals here, uh, in terms of planning intentions, if, if you increase, have Ukraine increased corn and soybeans, and then some of the other, uh, some of, some of the other reference prices.

James Mintert: We’ve been down this path in multiple times in U.S. ag policy, when you raise those reference prices, target prices, et cetera, and the mechanics are always a little bit different in terms of how the programs work. But when you raise those too high. Set those bars too high, you can create some challenges with respect to building of inventories, right?

Michael Langemeier: Yes.

[00:18:47] Farm Labor and Immigration
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James Mintert: So that’s, that’s obviously the concern. So with all the talk about, uh, restrictions on immigration or lower integration, we decided to ask some questions about that with respect to what impact it might be having on farm labor.

So the first question was, do you normally hire non-farm non-family members to work in your farm operation? And roughly half, 51% of the people in the survey said yes. So if you said yes to that question, you received a follow-up question, which was, are you having, or do you expect to have difficulty hiring adequate labor in 2025 for your farm operation as a result of the U.S. administration’s policy to reduce immigration?

And there’s two ways of looking at this, Michael, and I think I’m gonna, before I present the results, I’m gonna remind listeners of who we survey. We survey producers of the major crops, corn, soybeans, wheat, and cotton. And we survey producers of livestock that produce, for example, hogs, beef cattle, and dairy. We do not intentionally survey specialty crop producers. Now, we do get some of those folks in the survey, but it’s because they produce one of those other commodities. So with that introduction, I’ll tell you that 74% said they were expected to have no difficulty, but 26% said they would have or expected to have either a lot of difficulty or some difficulty. A lot of difficulty was 10%, some difficulty was 16%.

So Michael, you and I were talking about this earlier. That might be the more significant part given who we’re surveying the producers of major crops. Major livestock enterprises, roughly one fourth are expecting to see some difficulty in hiring labor.

Michael Langemeier: Yeah, that, that seems high. When we, uh, given the fact that, that quite a few of these farms probably have very few hired employees. I mean, we, we, this question obviously went to those that do have, uh, do have hired labor, but quite a few of those people probably only have one, two, uh, three people. So the fact that a quarter of them are having some difficulties probably, probably fairly high.

James Mintert: Yeah. I mean, we’ll probably ask this again. Oh, I think we will ask it again and kind of see how it, how it looks as we progress through the year. But, uh, yeah, that’s at first glance, when you say three-fourths, no difficulty, you think, well, okay, not a big problem. But then you start thinking about who we survey and the fact that it’s really more likely to in have an impact on specialty crop producers especially. Um, the fact that we’ve got one out of four saying some degree of difficulty, uh, that’s.

Michael Langemeier: Yeah. And if a person has one or two hired employees and you lose one, you have a lot of difficulty. That’s a, that’s a pretty big challenge for, for, for a farm in that situation. So,

James Mintert: yeah. Yeah. Good point.

Okay, so the last question is one we’ve been asking now, I think, uh, a couple of times now. So I, do you expect the increased use of tariffs by the U.S. to strengthen or weaken the U.S. ag economy in the long run? So two months in a row now, April and and May. We’ve got almost identical responses. And April 70% of the people said they expect the use of tariffs to strengthen the U.S. ag economy. In the long run this month in May, it was 69%. So really no change. So a large majority of people think this will have a positive impact on the U.S. ag economy. Um, those that does not include, I don’t, I don’t know anybody in the, in the ag economics profession that agrees with that. But, but that’s what producers are telling us, right?

Michael Langemeier: Uh, yeah. I, I, I don’t, I, I personally don’t, don’t agree with this, but, uh, uh, but, but that, I think that explains why we have the highest Index of Future Expectations since April, 2021. Uh, if you really believe this, you’re pretty optimistic about the long run.

James Mintert: You know, and, and thinking about why people might respond this way. Uh, it appears that they’re think the use of tariffs as a negotiating tactic is gonna wind up in a, in a favorable outcome. Is that fair to say?

Michael Langemeier: I think that’s right, but again, we’ve talked about that before. I worry about, I worry about long-term market share and what that does to the confidence of people that are buying our products, uh, that I really worry about that.

James Mintert: Yeah, I think we both worry about that, but I think, I think what we’re picking up in the survey is this idea that as a negotiating t, that it will wind up opening markets,

Michael Langemeier: we’re gonna get better deals,

James Mintert: it, it will wind up opening markets. ‘Cause we’ve always had some difficulty with some countries with respect to import limitations and there’s, I think we’re picking up this expectation that those will be relaxed because of use of this policy. So it’s an open question

Michael Langemeier: Yes.

James Mintert: As to who’s right.

Michael Langemeier: Time will tell.

James Mintert: Yeah. It’s an open question is who’s right. But that’s what we’re picking up on the survey.

[00:23:12] Conclusion and Resources
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James Mintert: So, so that wraps up the highlights of this month’s survey. You can get the full report on our website, purdue edu slash ag barometer. Of course, you can listen to this podcast not only for the summarizing, uh, the results of the ag economy barometer, but also, lots of other farm management news and information topics on the Purdue Commercial AgCast. On behalf of the Center for Commercial Agriculture and my colleague Dr. Michael Langemeier, I’m James Mintert. Thanks for listening.