U.S. farmers started 2025 on a positive note, with the January Purdue University/CME Group Ag Economy Barometer rising 5 points from the previous month to 141. This increase was driven by a 9-point rise in the Current Conditions Index and a 3-point increase in the Future Expectations Index, reflecting improved sentiment across the agricultural sector. The primary factor behind this optimism was higher crop prices, particularly in fresh produce markets, leading to fewer concerns about pricing pressures on fruits and vegetables.
Fresh produce growers benefited from price increases in key crops between December and mid-January, easing concerns about profitability. The Farm Financial Performance Index rose 13 points, indicating that farmers anticipate stronger financial stability in 2025 compared to 2024. Despite this optimism, fresh produce growers remain cautious about operating loan repayments, input costs, and export market challenges.
Investments in farm infrastructure, including fresh produce handling and storage facilities, remained steady. The Farm Capital Investment Index held at 48, unchanged from December but significantly higher than its mid-2024 low of 31. However, it remains uncertain whether this optimism will translate into increased spending on cold storage, irrigation systems, or advanced greenhouse technologies to enhance fresh produce quality and shelf life.
The Short-Term Farmland Value Expectations Index rose 5 points to 115, indicating stable confidence in land values, which is crucial for fresh produce growers considering expansion. However, the Long-Term Farmland Value Expectations Index dropped 5 points to 150, reflecting potential concerns over long-term investment viability in fruit and vegetable production.
Additionally, leasing farmland for solar energy has gained interest among fresh produce farmers. 11% of farmers discussed solar leases, with 40% receiving offers of $1,250 per acre or more. Some fresh produce growers see solar leasing as a way to diversify income, particularly in regions facing water scarcity and climate-related production challenges.
Despite positive trends, fresh produce farmers continue to face challenges in trade and financial management. 42% of producers identified "trade policy" as the most important issue affecting their farms over the next five years, highlighting concerns about export market stability and access to key destinations like Canada, Mexico, and Asia.
At the same time, a growing number of farmers anticipate needing larger operating loans in 2025, with 18% expecting an increase, up from 15% in 2024. This trend suggests rising financial pressures in fresh produce farming, as input costs for labor, packaging, and transportation remain high.
Overall, the January survey signals a cautiously optimistic outlook for fresh produce growers, as higher prices and improved financial conditions provide stability. However, trade uncertainties, investment hesitations, and operational costs remain key concerns as the industry moves through 2025.
Source: Purdue University