Farmers are thrilled about potential Trump tax and regulation cuts

Make America Grow Again?

The Purdue/CME Group Ag Economy Barometer, a gauge of farmer sentiment, surged to a 3.5-year high in November in the wake of the US election.

Most of the improvement in this index is linked to more optimistic attitudes about the future rather than positive developments in the here and now: farmers expect a lighter regulatory environment and, compared to how they felt after the 2020 vote, lower income and estate taxes.

“Following the 2024 election, there was a big swing in farmers’ perspectives on environmental regulations impacting agriculture,” per the report.

There’s only one company in the S&P 500 agricultural and farm machinery industry: Deere.

A similar “optimism about the future despite underwhelming recent performance” pervades there, as well. Deere soared after posting subpar earnings recently, as investors are hoping for a broad turn in the agricultural sector, and recently hit a record high. We’ve observed a similar dynamic at play in the energy sector, as well.

For farmers, this cheery attitude surrounding the incoming administration might be a bit of a “be careful what you wish for” situation. On the one hand, President-elect Trump’s policy priorities might make it easier for them to do business and keep more of what they make. On the other hand, other executive actions might make it harder for them to boost production and reach customers.

A significant share of undocumented immigrants — a group the president-elect has pledged to deport — work in farming and agriculture. And even as farmers see the glass as half full, they acknowledge the potential for export barriers to crimp their ability to access markets.

“Perhaps the biggest concern expressed by farmers as the transition to a new administration gets underway is the future of agricultural trade,” the report found, “with over two-fifths of survey respondents saying they think a ‘trade war’ is either likely or very likely.”