A survey of ag producer sentiment in May reveals the lowest overall reading since September 2020 and declines in several areas, but farmers and ranchers expect farmland values to rise over the next five years. 

The Ag Economy Barometer, produced by Purdue University and the CME Group, showed a sharp decline of 20 points, to a reading of 158, according to the survey, conducted in May. That number was 156 in September.

Overall, there has been a stark decline in the outlook for U.S. agriculture, with only 27% of respondents expecting good times in the next five years. This is the lowest reading in the history of the survey.

Purdue's James Mintert pointed to "the potential for changing tax rules and rising input costs" as "primary drivers" for the month's results. 

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Concerns about potential tax changes remained strong heading into May, with 78% of producers reporting being very concerned that tax policy changes will make passing their farm on to the next generation more difficult and 83% predicting that capital gains tax rates will rise over the next five years. Meanwhile, 71% are very concerned that the step-up in cost basis for inherited estates will be eliminated.

Apart from the steady fear of tax policy and the rising construction costs, two-thirds of producers expect farmland values to rise over the next five years. Further, two-thirds of corn and soybean growers said they expected cash rental rates in their home areas to rise above 2021’s rates next year.

The Ag Economy Barometer uses survey responses from 400 U.S. ag producers and was conducted from May 10-14.

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