Farmer sentiment is at its lowest point in nearly a decade, complicating an already tricky investment landscape ahead of a tight U.S. presidential election. In the face of weakening income expectations, farmer sentiment in September reached its lowest levels since March 2016 — driven in part by worries around the U.S. presidential election — according to the latest reading from the Purdue University/CME Group Ag Economy Barometer. In fact, 78% of the 400 agricultural producers assessed in the survey — which tracks the health of the agricultural economy in the U.S. — expressed concern that changes in government policy following November's election could potentially worsen an already difficult environment. Farmers are much less confident now than they were a year ago about their finances. Specifically, the report showed that the farmers' financial expectations index dropped 18 points to 68 compared to the prior-year period. This would mark the third month in a row of declining expectations. And for the first time since 2020, more farmers expect farmland values to go down rather than up. James Mintert, director of Purdue University's Center for Commercial Agriculture, expects land values to likely flatten in the short term. In the long term, conditions could get even worse if commodity prices continue to fall amid supply outpacing growth and demand, he added. "People are clearly less optimistic about land values now than they were a year ago, two years ago and especially three years ago," Mintert told CNBC. "If this cost-price squeeze in commodity prices continues, there's a good chance we'll see some softness develop in the land market." This comes as a recent NBC News poll shows former President Donald Trump and Vice President Kamala Harris in a dead heat ahead of the Nov. 5 election, making it unclear how the agriculture space could be further affected. Growing uncertainty On top of high input costs and low commodity prices, anxiety about changes to regulation and taxes are fueling this waning sentiment among producers, according to Michael Langemeier, the associate director of the Purdue center. "They're really worried about changes in the estate tax," Langemeier said. Higher estate tax exemptions approved under the Trump administration's Tax Cuts and Jobs Act of 2017 are set to expire next year. "Land values are very high right now, and the estate tax amounts that are excluded from estates, that amount is set to decline after 2025." Beyond that, he noted that farmers are worried in general about the farm safety net — or the lack thereof. To date, the federal government has yet to renew the Agriculture Improvement Act of 2018, which provides producers with things such as federal crop insurance and commodity support programs, farm loans and disaster assistance. "Until that's actually signed, sealed and delivered, they're going to be a little concerned on potential cuts in the safety net," Langemeier said. Kristen Owen, an analyst covering sustainable growth and resource optimization at Oppenheimer, said she thinks a new farm bill will likely not be enacted until 2025. That's also when key policies through the Biden administration's Inflation Reduction Act are put into action. Owen underscored there are questions surrounding what will happen to the law's tax credits that affect the farming sector under either a Trump or Harris administration. The difference in both candidates' trade and tariff policies is another big factor, she said. Trump's economic platform features hardline tariff proposals . The Republican nominee also threatened in October to slap manufacturer Deere with a 200% tariff if it moves some of its factories to Mexico. Harris criticized Trump's tariff stance in a debate in September , calling it the "Trump sales tax." She added: "Let's be clear that the Trump administration resulted in a trade deficit, one of the highest we've ever seen in the history of America." "There is a lot of uncertainty for the farm economy," Owen added. "The election is not necessarily going to be that catalyst that creates more certainty." Despite that, the outlook for some of the agriculture players is still bright, even if the outlook for the farming sector isn't. Stocks to watch Though Owen doesn't expect a sweep for either political party in November, the analyst is eyeing industrial giant Caterpillar as a direct beneficiary of a Republican victory. "Caterpillar is sort of the bellwether for industrial activities," she said. "It also benefits from some of the tax policies that have been supported by the Trump administration [in] the past, including things like accelerated depreciation [and] lower corporate tax rates." And while reshoring is likely to work under the administration of either presidential candidate this election, Owen sees that trend and the support for domestic industrial policy under a potential Trump administration as other catalysts for share growth as well. CAT YTD mountain CAT, year-to-date Deere could also respond favorably in the short term to a Republican sweep, Owen said. However, she emphasized that any gains will likely fade pretty quickly due to the aforementioned uncertainty stemming from the Trump administration's trade policies in particular, especially with respect to China. "The 2019-2020 [trade] war with China actually delayed the equipment purchasing cycle by probably two years," Owen said. "Farmers got Trump bucks in return, but that wasn't sufficient for overcoming the uncertainty created by having just a lack of market access." Cerity Partners' Jim Lebenthal is sticking with Deere regardless of the outcome of the election. He thinks its current share price suggests that agricultural prices may have hit a trough. "Management gets a high mark for how they're handling a tough macro situation by limiting production," the firm's partner and chief equity strategist said in an interview. "If the bottom is in, they do have some gains ahead of them." DE YTD mountain DE, year-to-date Both Caterpillar and Deere have hit fresh 52-week highs in October. Year to date, Caterpillar has popped more than 30%, while Deere has risen around 2%. Owen said under a Democratic win, shares of Green Plains could do well — that among the names she covers it has the highest exposure to IRA tax benefits, which she said primarily come through renewable fuels. "More of those policies that tend to be aligned with clean energy sources would benefit from a lack of that pressure from the Republicans," she added. The stock has struggled in 2024, losing more than 54%.
