Skip to Main Content

Ag Economy Barometer remains strong; producers concerned about possible changes in estate tax policy

Ag Barometer Outlook The Ag Economy Barometer shows a strong outlook, yet concerns. (Purdue/CME Group Ag Economy Barometer/James Mintert)

The Purdue University/CME Group Ag Economy Barometer was virtually unchanged in April, up one point from March to a reading of 178. Producers are becoming more optimistic about the future.

The Index of Future Expectations continued its upward trend from last month, up 5 points to a reading of 169. However, their views on current conditions slipped. The Index of Current Conditions dropped 7 points in April, to a reading of 195. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted April 19-23.

“The strength in commodity prices continues to drive improving expectations for strong financial performance, even as many are seeing rising input costs,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Farm Financial Performance Index hit a record high in April, up 13 points from March to a reading of 138, 83 points higher than one year ago. This month 50% of producers indicated that they expect better financial performance in 2021 compared to 2020, up from 39% who felt that way in March. Despite expectations for their farms’ strong financial performance, farmers were less inclined to think now is a good time for large investments in buildings and equipment than they were in March. However, in a follow-up question, when asked more specifically about their farm machinery investment plans, more producers in April said they planned to increase their farm machinery purchases than in March.

"The divergence between the two responses could be reflective of the run-up in building costs and difficulty in scheduling construction projects across the U.S," Mintert said.

Possible changes in U.S. tax policy are on the minds of ag producers. Ninety-five percent of respondents are either somewhat or very concerned that changes in tax policy will make it more difficult to pass their farms on to the next generation. Eighty-seven percent expect capital gains rates to rise over the next five years. Three-fourths said they are “very concerned” about the possible elimination of the step-up in cost basis for farmland in inherited estates and just over two-thirds (68%) of respondents said they are “very concerned” about a possible reduction in the estate tax exemption for inherited estates.

Farmers expect the rise in farmland values to continue unabated over the next year as the Short-Run Farmland Value Expectations Index rose to a record high reading of 159, 11 points higher than a month earlier. Producers were less optimistic, however, when asked about the 5-year outlook for farmland values as the Long-Term Farmland Values Expectations Index declined 9 points in April to a reading of 148.

“The difference in producers’ short- versus long-term expectations could be an indication that they are concerned that the rapid rise in farmland values we’re seeing may not be sustainable over the long run,” Mintert explained.

With COVID-19 vaccinations widely available across the U.S., attention is shifting to the percentage of the U.S. population that does not plan to get vaccinated. To learn more about commercial ag producers’ vaccination plans and compare that to the U.S. population at large, the survey asked producers about their vaccination plans since October 2020. The percentage of producers saying “they do not plan to get vaccinated” declined from a high of 37% in October to 28% in January and has fluctuated between 28%-32% since that time.

Polls from Monmouth University conducted in January, March and April indicate 21%-24% of U.S. adults will “likely never get the vaccine,” while a Pew Research Center poll from February indicated that 30% of U.S. adults would “probably” or “definitely” not get a COVID-19 vaccine. Comparing this month’s survey results to these broader population surveys suggests the reluctance to get vaccinated for COVID-19 among U.S. ag producers mirrors that of the larger population of all U.S. adults.

Following a nearly one-year hiatus, more in-person ag field days, workshops and educational events are being planned for 2021. On both the March and April barometer surveys, we asked producers if they are more or less likely to attend these programs than they were in 2020. Responses were mixed. Just over 70% of respondents said they are more likely to attend in-person events this year, but 28 to 35% of producers said they are less likely to attend in-person events. For program planners, this implies a need to offer programs in a hybrid or virtual format to reach the broad audience of commercial ag producers.

Read the full Ag Economy Barometer report at https://purdue.ag/agbarometerThe site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly barometer email updates and webinars.

Each month, the Purdue Center for Commercial Agriculture provides a short video analysis of the barometer results, available,  and for even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer and a discussion of recent agricultural news that impacts farmers.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University’s Department of Agricultural Economics, the center’s faculty and staff develop and execute research and educational programs that address the different needs of managing in today’s business environment.

About CME Group

As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest ratesequity indexesforeign exchangeenergyagricultural products and metals. The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB, and Traiana, Inc., respectively. Dow Jones, Dow Jones Industrial Average, S&P 500, and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor’s Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners. 

Featured Stories

Against a black backdrop, three dozen egg carton are neatly arranged to surround many loose brown eggs
Butcher Block adds eggs from chickens fed orange corn

The Boilermaker Butcher Block’s selections will now include farm fresh eggs laid by Purdue...

Read More
Jingjing Liang stands tall in front of a wall of monitors showing pictures of different forests.
Scientists from dozens of countries coming to Purdue for forestry collaboration in Science-i Bridging Worlds Workshop

In the spirit of building a community to manage and protect the world’s forests, Liang and...

Read More
Julie Hickman stands in construction site with hard hat ready for work.
Behind the Research: Julie Hickman

Many people are involved in the remarkable range of programs, services and facilities that...

Read More
Purdue College of Agriculture.
Farmer Sentiment Improves As Interest Rate Expectations Shift

U.S. farmers’ perspective on the future improved in March helping to push the Purdue...

Read More
Nicholas Gallina
Nicholas Gallina - Graduate Ag Research Spotlight

If it’s one thing Nick Gallina knows, it’s the value of perseverance. Growing up in...

Read More
Bruce Hamaker stands in kitchen lab with arms on counter surrounding plates of potatoes, apples, spinach and grains
Promoting beneficial gut microbes with whole-food dietary fiber

Americans generally consume about half the recommended daily dietary fiber requirement. These...

Read More
To Top