The June 1 Purdue University/CME Group Ag Economy Barometer shows farmer sentiments declined significantly in May. Data showed a 20-point drop, falling from 178 to 158 and marking the lowest reading since September 2020.
(Read more about the barometer and how it is calculated here.)
“The potential for changing tax rules and rising input costs appeared to be on producers’ minds this month and were the primary drivers for the Ag Barometer’s decline,” says James Mintert, a Purdue University economist and author of the Barometer.
While the Farm Financial Performance Index also declined 12 points to 126, down from 138 in April, May still marked the second highest reading since spring 2018 (the first time the survey asked this financial performance question).
The survey also noted declines in anticipated construction plans and machinery purchases, and rising construction costs may be a factor, Mintert says.
Also top of mind with farmers are concerns over possible U.S. tax policy changes. According to the report, here were some of farmers’ responses:
> 78% of survey respondents said they are very concerned that the changes in tax policy being considered will make passing their farm on to the next generation more difficult.
> 83% of producers expect capital gains tax rates to rise over the next five years.
> 71% of respondents are very concerned about a possible loss of the step-up in cost basis for inherited estates.
> 66% say they are very concerned about a possible reduction in the estate tax exemption for inherited estates.
Conversely, farmers’ optimism over farmland values reached a record high of 158, according to the Long-Run Farmland Value Expectations Index. The Short-Run Farmland Value Expectations Index also showed continued strength, dipping only 2 points below the record reading in April.
