A measure of the state of mind in farm country held steady in April, but producers are showing concern about what could lie ahead as the Biden administration considers a host of tax policy changes.

The Ag Economy Barometer from Purdue University and the CME Group rose one point, to a reading of 178, in April. The figure is well above the plummeting figure of a year ago in the early days of the COVID-19 pandemic but is still a little below the record high from October 2020.

“The strength in commodity prices continues to drive improving expectations for strong financial performance, even as many are seeing rising input costs,” Purdue’s James Mintert said in a release.

Producers offered split opinions on their opinion of current and future expectations. The index of future expectations rose five points while the index of current conditions fell seven points. Farm country also expects an uptick in taxes in the future. Some 87% of respondents said they expect capital gains rates to rise over the next five years, another 75% said they are “very concerned” about the possible elimination of the stepped-up basis, and 68% said they were “very concerned” about a possible reduction in the estate tax exemption.

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Only 5% of producers said they were “not at all concerned” about the impact of policy considerations potentially making it more difficult to pass on assets. In contrast, 13% said they were “somewhat concerned” and 82% said they were very concerned.

However, producers are still investing in their operations, but are reporting plans to invest in things like equipment rather than buildings or similar improvements.

"The divergence between the two responses could be reflective of the run-up in building costs and difficulty in scheduling construction projects across the U.S.," Mintert said.

The survey is based on responses from 400 producers from across the U.S. and was conducted April 19-23.

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