---

Audio Transcript

James Mintert: Welcome to Purdue Commercial AgCast, the Purdue University Center for Commercial Agriculture’s podcast featuring farm management news information.

I’m your host today, James Mintert, Emeritus Professor of Agricultural Economics at Purdue University. And joining me today is my colleague, Dr. Michael Langemeier, who’s the Director of the Center for Commercial Agriculture and also a professor of agricultural economics. We’re gonna review the results from the July 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. This month’s Ag Barometer survey was conducted from the 7th through the 11th of July.

[00:00:44] Overview of Ag Barometer Results
—

James Mintert: And Michael, the barometer fell 11 points to a reading of 135, but that still leaves the barometer 22 points higher than it was this time last year.

And if you look underneath the barometer at the Current Condition Index and the Future Expectation Index. They both fell as well. The Current Condition Index fell pretty sharply. That was down 17 points to 127, but that still leaves that index 27 points higher than a year ago. And the Future Expectation Index fell 7 points to 139, but that still leaves that index about 27 points above July 2024. So first of all, any surprises in the decline in the barometer and the decline in current and future indexes?

Michael Langemeier: I was a little, I was a little surprised that the Index of Future Expectations fell as much as it did. I thought there might be a. A little bit of a drop there, but not quite as big as it was.

But the Index of Current Conditions dropping, uh, was, was no surprise. In fact, I thought it was a little strong last month. Uh, and, and if you look at, uh, last month compared to this month, we had continued weakness of prices. Uh, and, and so margins are look even worse, particularly for crop producers this month compared to last month.

And so that was not a surprise. In fact, I’ll, I’ll go on the record saying that. Uh, I expect a, a little, a little weakness in, in that Index of Current Conditions moving into the next couple months.

James Mintert: Yeah, I, I would agree with that. In fact, you know, if you think about surprises when we visit with colleagues around the country, I think they continue to express some surprise that these indexes are as strong as they are compared to a year ago. But I think it’s a little bit of a misunderstanding of what, uh, measurements of sentiment versus measurements of, of financial condition, which we’ll talk about later.

The other thing to talk about, and you and I have mentioned this in the past, is thinking about who responds to our survey and, and so we do have some questions in that are, uh, address the perspectives of crop producers and perspectives of livestock producers.

And so one of those questions is, would you say it is more likely that crop producers will have widespread good times or widespread bad times over the next five years. And when they talk about the crop sector, 45% of the people in the survey say they expect bad times for the crop sector over the next five years. The same question goes to the livestock sector, and only 13% expect bad times. 72% expect good times.

And it’s important to think about that because in our, in our survey, uh, by design, approximately one out of four people in the survey have a livestock enterprise, whether it’s beef, dairy, or pork. And there is a difference between what’s going on in the livestock sector versus the crop sector. And I think a lot of the negativity is really focused on what’s taking place in the crop sector, which is extremely important, but it kind of omits what’s going on in the livestock sector.

So when you look at the big picture, we are getting some positive support from the livestock sector and that’s being reflected to some extent in our surveys.

Michael Langemeier: Definitely. And we have to remember that a, a pretty large percentage of our surveys, beef producers, I think it’s about 20%. Uh, 20% of the survey, uh, are are beef producers and, and they’re doing quite well, particularly the cow- calf producers.

James Mintert: Yeah. Record, record profitability in the cow- calf sector. So you’ve got that dichotomy going on. And I’m not saying that that’s the only thing that’s supporting what’s going on with our sentiment index, but it’s clearly a factor in terms of what’s taking place.

[00:04:00] Farm Financial Performance & Investments
—

James Mintert: Uh, the Farm Financial Performance Index fell 14 points this month to 90. Um, a year ago that index was at 81, so it’s a little stronger than it was a year ago. But if you look at these last couple of months, that index has really come down. It, it was approaching 110, uh, a couple of months ago. Now it’s at 90. So people are telling us that there is a squeeze going on, and that 2025 does look worse than 2024, which I think is consistent with the work you’ve been doing with respect to,

Michael Langemeier: Yeah, I think it’s definitely consistent, consistent with that, though. The wild card in ’25 and I’ll, I’ll just, I’ll just, uh, talk a little bit about that is, is crop yields. Uh, there, there’s portions of the corn belt, it’s, it’s too early to tell exactly what those yields are gonna be, but there’s portions of the corn belt, uh, look really good, uh, in terms of the prospects for corn and soybean yields and so, and so, we could have a little bit of variability in this Farm Financial Performance Index in the next few months.

James Mintert: Yeah, I, I’ll reiterate that I spent a week riding a bicycle across the state of Iowa, and, uh, I didn’t see a bad field the entire time. So that, that kind of reinforces what you said, but it does depend on where you’re at. That was not universally true across the entire corn belt.

The Farm Capital Investment Index fell seven points to 53, but that was still 15 points higher than a year earlier. So the investment index, you know, if there’s one that kind of surprises me is that maybe the strength we’ve seen in the investment index. And now it’s not back to the levels we saw in 2020 and early 2021, when the index was above 90 for a period of time. But it’s still quite a bit stronger than than a a year ago.

And if you look at the responses to the question, that index is based on, the percentage this month reporting it’s a good time to make Investments did fall to 20% from 24%. Um, a year ago that good time was percentage was 13% and the percentage reporting bad times rose to 67% from 64% in June. But it, it’s interesting that we’re getting, 20% of the people saying that it’s a good time to make investments. You know, when historically going back, we were hovering around 10% or not too long ago, a little over a year ago. Explain that for me.

Michael Langemeier: Uh, the only thing I can think of is, is we, we’ve got some livestock producers in there that are primarily livestock. Maybe they have some crops too. There’s a lot of diversified farms in the Western Corn Belt, uh, that, that perhaps think this is a good time. That that’s the only, maybe that’s stretching a bit, but that’s the only thing I can think of that might be propping this up a little bit.

James Mintert: Well that, yeah, that’s a pretty good explanation I think. Uh, and it probably is a supporting factor.

[00:06:28] Farmland Value & Cash Rent Expectations
—

James Mintert: If you look at the Short- Term Farmland Expectation Index, there was some weakness in that one. That’s a second month in a row that index has weakened. It’s still above 100, which means that more people expect to see values rise over the next 12 months for farmland in their area than expect to see it fall. But at 115, it was down five points compared to last month and I think about 10 points below where it was two months ago. Um, and it’s actually just a fractionally below this time last year. This time last year was at 118. Statistically, probably not much difference between 115 and 118, but it does suggest maybe some concerns out there with respect to farmland values.

Michael Langemeier: But the fact that this is over a hundred is huge, uh, for the agriculture sector because, because if this is, is materialized and land values are relatively stable or even slightly higher in the next year, that’s really going to make ensure that our balance sheets, particularly the long, uh, the long side of the balance sheet remains relatively strong.

And that’s what you need, uh, when you have low net returns like that. If you have a strong balance sheet, you can weather the storm a lot better, uh, than if you start, you start seeing a drop in land values. And so and so, uh, this is good news, uh, for bank, not only bankers, but also also for the production agriculture sector.

James Mintert: And there’s a lot of data points out there with respect to what’s taken place in the farmland market in the first half of, of 2025. And I think if you look, summarize those, most of those are steady to maybe a little bit stronger. I don’t think any, the survey work that’s out there actually suggests any significant weakening. Is that correct?

Michael Langemeier: That’s consistent with what I’ve seen.

James Mintert: Yeah. So that’s, I think that’s also feeding into expectations.

This month was a month where we asked about cash rental rates. We’ve been doing that for the last several years in the summer as people start to have those cash rental rate discussions for the upcoming year.

So the question was, compared to this year, what are your expectations for cash rent in your area in 2026? And roughly three fourths of the crop producers said that they expect cash rental rates to remain about the same in 2026, as in 2025. And that might surprise some listeners given the weakness we’re experiencing in the crop sector. But you’ve done a lot of research on that.

Michael Langemeier: Yeah, it typically takes several years in a row of, of, of low net returns compared to cash rent, uh, to drive down those cash rent. People don’t make adjustments based on one year or even two years. Uh, if you go back to the 2014 to 2019 period, it took about three years of low net return before we saw that dip in cash rents in Indiana and across the Corn Belt. And so that’s part of, part of what I think is going on.

Another factor, I think, uh, when you’re looking at cash rents for 2026, is the fact that we’ve had reconciliation bill in December that provided some money. And then the recent, uh, recent legislation, uh, improved the safety net for agriculture. I think those are also, uh, playing into these numbers.

James Mintert: Yeah, that’s a good point.

[00:09:17] Ag Exports & Trade Expectations
—

James Mintert: We’ve been asking people about there are expectations for ag exports going all the way back to 2019, and we’ve been doing it every month. And if you look at the chart for this, you’ll kind of see this long-term downtrend with respect to the percentage of people who expect to see ag exports increase over time. That’s changed here in recent months, it’s kind of bumped back up. And this month was no exception. It was up a couple of points. The percentages say they expect to see ag exports increase over the next five years moved up to 43%. That’s up from 41% a month ago. And as recently as earlier this year, you know, that was just a little above 30%. So people are a little more optimistic about ag exports going forward. Uh, that’s kind of interesting.

And then the follow up is, we asked a question again this month that we previously asked back in 2020 and early 2021. And, and that is, in the next five years, how likely is it that new foreign export markets will open up to American agricultural goods? And the responses are kind of interesting there, Michael. This month, I think 64% said they thought it was likely that we would see new foreign export markets open up. Um, if you go back to 2020 and early 2021, that’s a little stronger, a little more optimistic than we were then.

It does not get us all the way back to the optimism that people expressed in October of 2020, when 78% of the people in the survey said they thought we would see ag exports increase over the next five years. So people are a little more optimistic than they were in, for example, early 2021, late 2020. But not all the way back to October of 2020. We’re probably asked this question again, but what’s your take?

Michael Langemeier: I think this is consistent with the questions we’ve asked about, about the policy environment. Uh, they’re 60% or more. I think that the, the current policy environment’s gonna be positive for production agriculture. That includes a, a tariff question in there. And so I think this is consistent with the answers to those questions.

James Mintert: Yeah, and I think it also kind of gets at this whole idea about of the tariffs

Michael Langemeier: Yes.

James Mintert: and, and the ongoing, uh, feeling among agricultural producers that at the end of the day, that this is based on some other responses to questions we’ve asked, at the end of the day, producers seem to think that the tariff, uh, war, so to speak, will play out in favor of U.S. agriculture.

Michael Langemeier: Yes.

[00:11:40] Farmers’ Biggest Concerns
—

James Mintert: This is a question you’ve been asking for some time now going back several years. But just looking at the responses for 2025, looking ahead to next year, what are your biggest concerns for your farming operation? And the responses don’t change a lot from one month to the next. Higher input costs continues to be the top concern. Lower crop and livestock prices is second place at at 29%, whereas 39% shows higher input cost. That’s kind of interesting, I suppose, and no big change there.

Then we had a follow up question, which we don’t routinely ask. What are the biggest challenges to the success of your operation over the next 5 to 10 years? So now we’re contrasting what people think about this year versus 5 to 10 years. Crop or livestock prices was by far and away the biggest concern. When we asked people from the longer term perspective that was chosen by 36% of the people in the survey.

Cost control was only chosen by 17%. So more than twice as many people chose crop and livestock prices as the top concern as chose cost control. Those two don’t seem to mesh very well, do they?

Michael Langemeier: This is, this was really interesting to, to see the responses to this. And it’s almost like they don’t think break even prices are going to stay at their current levels. Uh, would is, am I, am I in the right direction here? I, it’s almost like they, they, they think this is a temporary situation. I personally don’t. I think we’re gonna be, I have relatively high break even prices for the foreseeable future. So cost is gonna be an issue, uh, for, for years to come.

The other thing that was really interesting about the responses to these questions is financial considerations was only 9%. That’s really important when you think about financial stress. When you talk about financial stress, you’re talking about low net returns and high leverage. This tells me that there’s still, uh, there’s still a lot of farms out there with a solid balance sheet. And, and so the financial stress is, is, is not as high, uh, as you’d, as you perhaps would expect, uh, given the low net returns.

James Mintert: Yeah, and you and I were talking about this before the podcast. There’s a lot of concern in the press about the stress on the ag sector in general. And yet when we talk to producers, they’re not as worried about it, which I think is reflective of the fact that they are entering a, a period of, of difficult returns on the crop sector, uh, with a very strong balance sheet.

And with respect to cost control, the interesting thing I think, for maybe both of us is the fact that if you look at history in terms of sorting out who’s more successful in the long run, historically cost control has been extremely important. Uh, and, and when you look at the research, probably more important than the ability to extract higher prices from crops or livestock.

So interesting survey result. Uh, and it, it points out a little bit of a contrast between what people think about or the short run, the next 12 months versus the next five to 10 years.

[00:14:32] One Big, Beautiful Bill & Ag Policy
—

James Mintert: Um, um, this survey was done just after Congress passed the so-called One Big, Beautiful Bill, which provided some clarity with respect to farm bill support levels, um, especially PLC and ARC prices for crops. So we asked the question, do you expect the farm safety net provided by U.S. farm programs in the 2025 farm bill to be stronger than, weaker than, or about the same as the previous farm bill? 54%. Just over half said about the same, but 31%. Said, stronger than, and that was double the percentage that said weaker than, so what’s your take?

Michael Langemeier: I was surprised that 15% said weaker than. Uh, when I look at the farm bill, maybe I’m, I focus so much on corn, soybeans, and wheat. Uh, certainly when you look at some of the key crops like corn, soybeans, and wheat, that the safety net is much, much better. Uh, with the One Big, Beautiful Bill than it was before.

James Mintert: Yeah. And I think that also ties back in with your, your other comments with respect to what’s supporting cash rents.

Michael Langemeier: Yes.

James Mintert: And maybe farmland values. Right?

Michael Langemeier: I mean, for example, the reference price for soybeans went up 19%. I mean, it was really low at 8.40. It’s back up to about 10. That’s a much different safety net $10 reference price compared to $8.40.

James Mintert: Yeah. Good, good point.

Then the last question we asked, again, reflective of the fact of when the survey was being conducted. So we finalized the survey just after Congress passed the One Big Beautiful Bill, and so we included a question that said, would you say things in the U.S. today are generally headed in the right direction or on the wrong track?

Um, and this is the kind of survey question that’s other big survey agencies and organizations use. So very similar. In fact, we tried to copy a question from, from other survey groups. 74% said right direction. Uh, 26% said we’re on the wrong track. Again, I think this kind of helps explain why sentiment is as strong as it is given the weakness we’re seeing in the crop sector.

Michael Langemeier: Particularly that Index of Future Expectation is it’s, it’s quite a bit higher than it was last year at this time. And I think this question answers why. They think we are headed in the right direction in terms of policy. We, uh, they’re, they’re pretty confident in the, in the long run outlook, uh, the long run policy outlook and, and, uh, uh, that’s helping sentiment.

James Mintert: And I think it ties back to what’s going on with tariffs.

Michael Langemeier: Yes.

James Mintert: I do think we’ve asked, uh, our questions related to the tariff policy, and producers have told us they think in the long run, this will work out well for U.S. agriculture. I think this question is, is indicative that there’s still, uh, in that, in that camp, so to speak.

[00:17:09] Conclusion & Resources
—

James Mintert: So that wraps up the highlights for this month’s survey. You got more details available on our website, which is purdue.edu/agbarometer. You can download the entire report accompanying the release of the recording.

So with that, I’m gonna wrap it up on behalf of my colleague, Dr. Michael Langemeier, I’m James Mintert.