Farmer Blues Show in Economic Gauge

Feeling blue about the ag economy? You’re not alone. 

Reaping frustration: Farmer sentiment is in the gutters. So much so that outlooks are the most negative since 2016. Producers have become more worried about low crop prices, high input costs, and bleak export expectations. 

Notably, lower crop prices are becoming a larger concern, with 33% of farmers surveyed for the Purdue University/CME Group Ag Economy Barometer citing it as their top concern.

Crop prices have sustained a downward trajectory as farmers expect a record harvest this fall. 

Soundbite: “It’s notable that producer sentiment dropped back to levels last seen in 2016 when the U.S. farm economy was in the early stages of an economic downturn. In addition to commodity prices and input costs weighing heavily on their operations, producers are also facing considerable uncertainty about what lies ahead for their farms with the possible government policy changes following the upcoming 2024 elections.” — James Mintert, director of Purdue’s Center for Commercial Agriculture

Insurance payouts are expected to be under $1B for a third consecutive year in 2024, though price loss coverage and agriculture risk coverage could reach $5B for the next two years. 

Any silver lining? U.S. net farm incomes will undoubtedly be down this year due to tighter margins. However, the USDA’s latest projections suggest they may not be as low as initially thought.

Part of that was due to a downward revision in farm production expenses. That wasn’t a big drop—but it remains an important piece of the puzzle for farm profitability.