WEST LAFAYETTE, INDIANA, US — US farmers are sensing some financial improvement during the next 12 months, a change from last year’s expectations of a downturn, helping push the Purdue University/CME Group Ag Economy Barometer score to 114 in March, up 3 points from February.

While the Index of Current Conditions fell by 2 points to 101, the Index of Future Expectations climbed to 120, up by 5 points from February, owing to a more positive financial outlook going forward, the report noted. The survey was conducted March 11-15.

“Producers’ expectations for interest rate changes have shifted, which could help explain why producers look for financial conditions to improve,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

This month, 48% of respondents said they expect a decline in the US prime interest rate over the next year, up from 35% in December. Just one-third (32%) foresee an increase, compared to 43% last month. Only 20% of respondents this month identified the risk of rising interest rates as a primary concern, a decrease from the 24% recorded December 2023. High input costs continue to be producers’ greatest concern, with 36% of respondents expressing worry.

The Farm Capital Investment Index increased by 7 points this month, indicating growing optimism among producers about making large investments. Producers who said it is a good time for a large investment rose to 15%, up 11% from the start of the year.

Producers displayed a more optimistic short-term outlook on farmland values in March, with the Short-Term Farmland Values Index rising to 124, a 9-point increase from the previous month. This month, 38% of producers expect farmland values to increase in the coming year, compared to 31% in January and February.

“Factors contributing to this optimism included non-farm investor demand, inflation expectations and strong cash flows,” Mintert said. “An improved interest rate outlook might have been a factor as well, although producers didn’t point to that explicitly in this month’s survey.”

US elections are on the minds of farmers as well. The March barometer revealed that many farmers are concerned about potential government policy changes affecting their farms following national elections in November. Forty-three percent of respondents anticipate more restrictive regulations for agriculture. Additionally, 39% of producers expect taxes that affect agriculture to rise.