Producer confidence in the financial health of the farm sector tanked in September, falling to its lowest level since March 2016.

The Purdue University-CME Group Ag Economy Barometer fell 12 points in September to 88, relative to a baseline average of 100, and was down 18 points from a year earlier.

“The significant part was that we’re below 100 because the base level for the barometer … is the last quarter of 2015 and the first quarter of 2016,” said Jim Mintert, director of the Purdue Center for Commercial Agriculture.

So September’s reading shows sentiment has dipped below what it was in that late 2015/early 2016 era, which was the early stages of a pretty significant downturn in the U.S. farm economy, he said in the latest barometer podcast.

“That tells me producers are pretty concerned about economic conditions on their farms and for the ag economy right now,” he said.

Crop margins

That’s particularly true for crop producers. It’s obvious that people are much more pessimistic about the crop industry than the livestock industry, said Michael Langemeier, associate director of the center.

It’s not really a surprise the index is below 100, given that projected net returns for 2024 are lower than they were in 2016, he said.

The current conditions index was down 7 points to 76, and was 22 points lower than a year earlier. The future expectations index was down 14 points to 94 and was 15 points lower than a year earlier.

“No big surprise here. But if there was maybe a little bit of a surprise maybe it was thinking the current condition index might fall even more than what it did,” Mintert said.

Long-term pessimism

Langemeier didn’t expect the index of future expectations to drop as much as it did, and that speaks volumes about what people think the next several years looks like. That big of a drop shows producers are pessimistic long term, he said.

That pessimism showed up elsewhere in the survey with respect to producers’ attitudes about future agricultural exports, which was at its lowest since the survey started asking the question in 2019, Mintert said.

“Historically, export growth has been an engine of growth for the U.S. ag sector, and people are pretty pessimistic about what’s taking place there,” he said.

The farm financial performance index came in at 68, down four points from August and 18 points below a year earlier, and that really tells the story, he said.

That definitely tells the story that they’re really worried about this margin squeeze, Langemeier said.

Financial concerns

In late spring/early summer, people didn’t seem all that cognizant of how low prices were headed and the impact that was going to have on their financial situation, Mintert said.

“I think everybody’s fully aware, fully engaged at this point,” he said.

That’s clearly true in the crop sector, not true in the beef sector and less true overall in the livestock sector, he said.

One-third of the people in the survey are worried about crop and livestock prices as a top concern. That essentially matched the percentage who said higher input cost was the top concern, which has been the No.1 concern since the survey started asking this question, he said.

That shows people are worried about a price squeeze, he said.