Concern about input costs ticked higher in March, even as overall U.S. farmer sentiment improved from the previous month, according to the latest Purdue University-CME Group Ag Economy Barometer on Tuesday.
The barometer index rose to 127 in March, up from 116 in February, reflecting a rebound in producer confidence. The gain was driven largely by stronger expectations for the future, with the Future Expectations Index climbing 14 points, compared to a 6-point increase in the Current Conditions Index. Despite the improvement, future sentiment remains below year-ago levels, sitting 16 points under March 2025.
Producers remain cautious about the longer-term outlook. Just 37% of respondents said they expect good times for agriculture over the next five years, down 12 percentage points from a year earlier. The outlook also varies sharply by sector, with 63% of livestock producers expecting favourable conditions, compared to only 31% of crop producers.
Rising input costs continue to weigh heavily on farm outlooks. The share of respondents identifying input costs as their top concern edged up to 46% in March, from 44% the previous month. Elevated costs for fuel, fertilizer and other inputs remain a key pressure point, particularly as margins tighten across much of the crop sector. Fuel and fertilizer prices have soared since the beginning of the U.S. war on Iran in late February.
At the same time, producers expressed growing optimism about broader economic and policy conditions. The percentage of respondents who believe the U.S. is headed in the right direction rose to 65%, up from 59% in February. More farmers also expect farmland values to increase over the next five years, suggesting improved confidence in longer-term asset values.
Inflation and interest rate expectations were mixed. About 39% of producers expect consumer inflation to run above 3% over the next year. Meanwhile, 34% anticipate lower interest rates over the next 12 months, compared to 16% who expect rates to rise.
The March barometer survey, conducted from March 16 to 20 among 400 producers nationwide.
