The Purdue University-Chicago Mercantile Exchange Group Ag Economy Barometer for May demonstrated a 20-point decline to 158, the lowest reading since September 2020. In May the Current Condition Index fell 17 points to 178 and the Future Expectations Index was 20 points lower compared to April attaining a value of 149.
The Farm Capital Investment Index declined 10 points from April to 65. In December this index peaked at 93. Most of the four hundred respondents to the telephone survey indicated that they would maintain machinery purchases and erect grain bins and buildings at about the same level as 2020.
Despite pessimism, the Long-Run Farm and Value Expectations Index rose 10 points to a record 158 with most respondents anticipating a rise in land prices over the next five years.
In interpreting responses, compilers of the indexes point to concern over U.S. tax policy, with specific emphasis on a state tax exemption for inherited estates and capital gains tax increases. These changes would generate complications and expenses for farmers bequeathing their land holdings to the next generation.