The latest April reading of the Ag Economy Barometer was 178, virtually unchanged from a month earlier when the index stood at 177 and just 5 points below its all-time high of 183, which was set back in October. Compared to March, however, there was a small change in producers’ perspective on the ag economy as they became more optimistic about the future, while their appraisal of the current situation waned. In April, the Index of Future Expectations rose 5 points to 169, whereas the Index of Current Conditions moved down 7 points to 195. Both of the barometer’s sub-indices remain historically strong, with the Index of Current Conditions just 3% below its all-time high and the Index of Future Expectations reaching its second-highest reading since the survey’s inception in fall 2015. 

Farmers’ expectations for their farms’ financial performance continues to improve. The Farm Financial Performance Index rose to a record high reading of 138 in April, up 13 points from a month earlier and 83 points higher than in April 2020. Strength in the financial performance index this month was primarily driven by more producers saying they expect better financial performance this year compared to 2020, up from 39% who felt that way in March to 50% in April. Strength in commodity prices continues to drive improving expectations for strong financial performance, even though many input costs are rising.

Somewhat surprisingly, given expectations for strong financial performance, the Farm Capital Investment Index declined 13 points in April compared to March, leaving the index at 75. This month’s decline leaves the index just slightly ahead of where it was before the pandemic got underway in winter 2020 when it stood at 72. The investment index is based upon a question that asks producers if now is a good time or a bad time to make large investments in things like buildings and equipment. However, when asked more specifically about their plans concerning farm machinery purchases, farmers’ optimism was still evident. Compared to March, more producers this month said they plan to increase their machinery purchases and fewer farmers said they plan to hold their future purchases unchanged from a year earlier. The difference in responses to these two investment questions could be reflective of both the run-up in costs and difficulty in scheduling construction projects across the U.S.