The Farm Monetary Efficiency Index climbed 13 factors in January
6 February 2025
4 minute learn
US farmers started 2025 with an optimistic outlook, because the January Purdue College/CME Group Ag Financial system Barometer rose 5 factors from the earlier month to a studying of 141, in response to a latest press launch.
This enhance was pushed by a 9-point progress within the Present Circumstances Index and a 3-point rise within the Future Expectations Index. The development in sentiment was linked to increased crop costs between December and mid-January and fewer producers citing crop and livestock costs as a high concern. As an example, Jap Corn Belt costs for near-term supply of corn and soybeans rose by 9% and 5%, respectively, throughout that interval. Whereas farmers’ views of present circumstances improved, optimism in regards to the future remained even stronger, with the Future Expectations Index exceeding the Present Circumstances Index by 47 factors.
This month’s survey was performed between Jan. 13-17.
The Farm Monetary Efficiency Index climbed 13 factors in January, reflecting an identical rise within the Present Circumstances Index and indicating that producers, on common, anticipate 2025 will probably be a extra strong monetary 12 months than 2024. In the meantime, the Farm Capital Funding Index remained regular at a studying of 48, unchanged from December. Regardless of no change, the funding index stays considerably increased than final summer time’s low of 31 and represents the second-highest studying of the previous three years. Producers’ optimism in regards to the future seems to assist the stronger funding index, although it stays unsure whether or not this optimism will result in extra farm equipment or new development investments.
“The January survey displays a notable sense of optimism amongst US farmers, significantly concerning their anticipated monetary efficiency in 2025,” mentioned Michael Langemeier, the barometer’s principal investigator and director of Purdue College’s Heart for Industrial Agriculture. “Current enhancements in crop and livestock costs have offered a lift to farmers’ present sentiment. Though farmers are optimistic in regards to the future, there are some clouds on the horizon. For instance, extra farmers this month reported challenges in paying off working loans in comparison with the final couple of years, and lots of producers are apprehensive about the way forward for agricultural commerce, with 40% of this month’s respondents saying they suppose a commerce battle is both possible or very possible.”
The Brief-Time period Farmland Worth Expectations Index rose 5 factors in January to a studying of 115, returning to its November stage. Farmers’ confidence in rising farmland values, which dipped late final summer time amid weaker crop costs, has stabilized since October, with the index fluctuating between 110 and 120 in latest months. January’s modest enchancment displays a better share of producers anticipating values to extend, coupled with fewer anticipating values to stay unchanged. In the meantime, the Lengthy-Time period Farmland Worth Expectations Index, which gauges expectations for the subsequent 5 years, declined 5 factors to 150. Regardless of the dip, the long-term index stays 8 factors above its 12-month low recorded final August.
The January barometer survey, which has yearly included questions on farmers’ working loans for the upcoming 12 months since 2020, revealed a slight enhance within the share of producers anticipating bigger loans this 12 months — 18%, up from 15% in 2024. Amongst these anticipating a rise, 23% attributed it to carrying over unpaid working debt from the earlier 12 months, in comparison with 17% final 12 months and simply 5% two years in the past. The shift displays a decline in farm earnings, significantly crop earnings, over the previous two years and may very well be an early sign of rising monetary stress amongst producers.
Agricultural commerce stays a high concern for US farmers. In January, 42% of producers recognized “commerce coverage” as crucial coverage for his or her farm over the subsequent 5 years, greater than double the 17% who chosen “crop insurance coverage program.” Whereas there may be nonetheless vital concern amongst US farmers {that a} commerce battle might get away that negatively impacts U.S. ag exports, responses concerning worries a few potential commerce battle have eased barely since December, with 40% of producers now believing a commerce battle is “possible” or “very possible,” down from 48% the earlier month. In the meantime, the share of farmers who see a commerce battle as “unlikely” or “most unlikely” rose from 21% in December to 29% in January.
Curiosity in leasing farmland for photo voltaic vitality manufacturing continues to develop. In January’s survey, 11% of farmers reported discussing photo voltaic leases for his or her land inside the final six months. Lease charges provided by photo voltaic vitality corporations in 2024 and 2025 have been notably increased than in earlier years, with 40% of respondents reporting presents of $1,250 per acre or extra and 26% receiving presents of $1,500 per acre or extra. Moreover, 54% of respondents famous that contracts included escalator clauses, mostly starting from 2% to three% yearly, although some reported escalators of three% to 4% per 12 months. Total, 3% of survey respondents mentioned both they or certainly one of their landowners had signed a photo voltaic lease.
