Ag Economy Barometer: Farmer Sentiment Weakens

Dan Economy

Ag Economy Barometer

For the third month in a row, agricultural producer sentiment weakened. The October Ag Economy Barometer declined to 121, three points lower than a month earlier. The modest decline occurred as a result of producers weaker perceptions regarding both current and future conditions in the production agriculture sector. Recent weakness in farmer sentiment appears to be driven by a wide variety of issues, with concerns about input price rises topping the list.

The Farm Capital Investment Index remains weak, in large part because of supply chain problems as four out of ten respondents said tight machinery inventories were holding back their purchasing plans. Despite the weak overall sentiment expressed by producers, they remain optimistic about farmland values, both in the upcoming year and over the next five years.

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The Purdue University-CME Group Ag Economy Barometer index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey.

(From the National Association of Farm Broadcasters)


Farmer Sentiment Weakens Amid Rising Concerns of a Cost-Price Squeeze

Tuesday, November 2nd, 2021

James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture

For the third month in a row, agricultural producer sentiment weakened in October as the Ag Economy Barometer declined to 121, 3 points lower than a month earlier. The modest decline in the overall sentiment index occurred as a result of producers’ weaker perceptions regarding both current and future conditions in the production agriculture sector. The Index of Current Conditions declined 5 points to 135 in October while the Index of Future Expectations fell to 114 from 116 a month earlier. Recent weakness in farmer sentiment appears to be driven by a wide variety of issues, with concerns about input price rises topping the list. The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from October 18 to 22, 2021.

Ag Economy Barometer
Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-October 2021.
Figure 2. Indices of Current Conditions and Future Expectations, October 2015-October 2021.

The Farm Financial Performance Index declined 6 points to 104 in October. Rapid run-ups in input prices, especially fertilizer for crop production, are giving rise to concerns about producers’ operating margins weakening. Livestock producers are also concerned about a cost-price squeeze, especially in the pork and dairy sectors.

Figure 3. Farm Financial Performance Index, October 2015-October 2021.

There was a modest improvement in the Farm Capital Investment Index in October, rising 3 points to a reading of 46 compared to 43 in September. The investment index’s small improvement this month still leaves it 50% lower than the very optimistic level that existed at the start of 2021. Notably, tight machinery inventories continue to hold back producers’ machinery investment plans as nearly four out of ten respondents said their machinery purchase plans were impacted by low farm machinery inventory levels. The small upward shift this month was …..

Read the full Farmer Sentiment Weakens Amid Rising Concerns of a Cost-Price Squeeze report.