In April, farmer sentiment took a significant hit, as shown by the Purdue University/CME Group Ag Economy Barometer, which plummeted by 15 points from March to a score of 99.
Both components of the barometer saw declines: The Current Condition Index fell by 18 points to 83, and the Future Expectations Index dropped by 14 points to 106. This April marked the lowest sentiment reading since June 2022 and was just 3 points above the April 2020 score.
Additionally, the current condition rating for April hit its lowest point since May 2020. The downturn in sentiment stemmed from concerns about current financial conditions on farms and anticipated financial difficulties in the coming year.
The survey for the April Ag Economy Barometer was conducted from April 8 to 12, 2024.
Financial performance and farmland values are at the top of farmer concern
The decline in farmer sentiment in April mirrored broader worries about financial performance and farmland values. The Farm Financial Performance Index fell to 76 in April, down 7 points from the previous month and 21 points from its peak last fall at 97. This decline reflects growing concerns among farmers about the financial outlook for the upcoming year, with fewer expecting improved or similar financial performance compared to last year.
In April’s survey, farmers’ expectations regarding interest rates and farmland values underwent changes. Only 24 percent of respondents predicted interest rates to rise over the next year, down from 32 percent in March. Despite this slight improvement in their outlook on interest rates, fewer farmers anticipated an increase in farmland values, with more expecting values to remain steady.
In the April survey, only 29 percent of producers anticipated an increase in farmland values in the upcoming year, compared to 38 percent in March, while 17 percent anticipated a decrease, up from 14 percent in March. These shifts reflect farmers’ concerns about farm financial performance in 2024, overshadowing their more positive outlook on interest rates.
Solar energy shows growing interest
There is a growing interest in utilizing farmland for solar energy production, and it appears that solar lease rates are on the rise. This month’s survey indicated a 7-point increase in respondents reporting discussions with companies about solar energy leases, reaching 19 percent in April compared to 12 percent in March.
Specifically, discussions about solar leasing suggest an increasing demand for solar leases, with 58 percent of farmers reporting lease rate offers exceeding $1,000 per acre — up from 54 percent in March.
Over one-fourth of respondents (28 percent) said they were offered a farmland lease rate of $1,250 or more per acre. The increasing lease rates for energy production could potentially impact farmland values, particularly in certain areas. A
Among producers who anticipated an increase in farmland values in the next year, 8 percent highlighted energy production as a significant factor. Looking ahead, energy production activities could provide some support for farmland values and expectations in specific regions of the U.S.
