Farmer sentiment improves despite rising input cost concerns

Farmer sentiment improved in March as the Purdue UniversityCME Group Ag Economy Barometer rose to 127, up from 116 in February. The improvement was driven by a notable increase in producers' expectations for the future, with the Future Expectations Index climbing 14 points and the Current Conditions Index rising 6 points. Despite the improvement, producers' outlooks remain more cautious than a year ago, with the Future Expectations Index still below the March 2025 levels. The survey was conducted March 16-20. 

Producers reported mixed financial conditions in March, with 18% indicating their operations were better off than a year ago. Expectations for the year ahead continue to be cautiously optimistic, with 20% of respondents anticipating improved financial performance, compared with 18% expecting worse financial performance over the next 12 months. The Farm Capital Investment Index edged up 3 points to 53, but plans to expand machinery purchases remain limited, with only 4% of producers planning increases.

"While producers are feeling more optimistic about the future, there's still a noticeable gap between short-term challenges and long-term confidence," said Michael Langemeier, the barometer's principal investigator and director of Purdue's Center for Commercial Agriculture. "Longer-term optimism is supported by stronger expectations for farmland values and the broader economy, though livestock producers remain notably more optimistic than crop producers."

This month's survey also examined producer expectations for inflation and interest rates. Approximately 39% of respondents stated that they expect inflation for consumers to exceed 3%. When asked whether the U.S. prime interest rate would be lower, about the same or higher 12 months from now, 34% of producers anticipate lower interest rates, while 16% said they expect rates to be higher.

The March survey also included questions about leasing farmland for solar energy production. Twelve percent of producers reported discussing a solar lease within the past six months. Reported lease rates varied widely, with roughly 21% exceeding $1,500 per acre. More than half of respondents (56%) said contract offers included an escalator clause, most commonly in the 2% to 3% annual range. Overall, 5% of respondents indicated that they or one of their landowners had signed a solar lease.

Farmland value expectations strengthened in March, with the Short-Term Farmland Value Expectations Index rising from 123 to 125 and the long-term index increasing from 150 to 159. Producers pointed to alternative investments, net farm income and interest rates as the primary factors influencing farmland values.

Optimism about the direction of the U.S. economy improved in March, with 65% of producers indicating the country is headed in the "right direction," compared to 59% in February.

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

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About Purdue University

Purdue University is a public research university leading with excellence at scale. Ranked among top 10 public universities in the United States, Purdue discovers, disseminates and deploys knowledge with a quality and at a scale second to none. More than 106,000 students study at Purdue across multiple campuses, locations and modalities, including more than 57,000 at our main campus locations in West Lafayette and Indianapolis. Committed to affordability and accessibility, Purdue's main campus has frozen tuition 14 years in a row. See how Purdue never stops in the persistent pursuit of the next giant leap — including its integrated, comprehensive Indianapolis urban expansion; the Mitch Daniels School of Business; Purdue Computes; and the One Health initiative — at https://www.purdue.edu/president/strategic-initiatives.

Source: Michael Langemeier, mlangeme@purdue.edu, 765-494-9557

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SOURCE CME Group