The Purdue University CME Ag Economy Barometer dipped to a reading of 113 in March. That is the weakest farmer sentiment reading since May, 2020. The March reading went 12 points lower than a month earlier, and 36 percent lower than March, 2021.
Compared to a year earlier, producers appraisal of current conditions was down 44 percent, while their expectrations for the future fell 31 percent. Producers continue to say that they expect their farm’s financial performance to decline in 2022 compared to 2021.
Listen to Sabrina Halvorson’s full report giving farmers biggest concerns, and the war in UIkraine effects on production costs, here.
Ag Economy Barometer Slides Lower, Producers Concerned About War’s Impact on Input Prices
by James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture
The Purdue University-CME Group Ag Economy Barometer dipped to a reading of 113 in March, the weakest farmer sentiment reading since May 2020 which was in the early days of the pandemic. The March reading was 12 points lower than a month earlier and 36% lower than in March 2021. The decline in the barometer was driven both by weaker perceptions of current conditions and expectations for the future. Compared to February, the March Index of Current Conditions declined 19 points to 113 and the Index of Future Expectations declined 9 points to 113. When compared to a year earlier, producers’ appraisal of current conditions was down 44% while their expectations for the future fell 31%. 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 March 14-18, 2022.
Producers continue to say that they expect their farm’s financial performance to decline in 2022 compared to 2021. The March Farm Financial Performance Index, at a reading of 87, was up slightly (4 points) compared to February but it was still 30% lower than a year earlier. When producers think about how their farm will fare financially in 2022, it’s clear they do not expect commodity price strength to offset the dramatic rise in farm production costs they are experiencing.
The biggest concern among producers for their farming operation this year continues to be “higher input costs”. Drilling down a bit further, it’s clear that disruptions to trade in ag commodities and key inputs such as fertilizer resulting from the war in Ukraine are on producers’ minds as 19% of respondents chose “availability of inputs” as their biggest concern, matching the percentage of producers who chose “lower crop and/or livestock prices”. The March survey provided the first opportunity to ask producers explicitly how they expect war in Ukraine will impact U.S. agriculture. Producers overwhelmingly said they expect input prices to be most affected (63% of respondents) followed by crop prices (33% of respondents) and livestock prices (3% of respondents).
When asked about their expectations for farm input prices in the upcoming year, 57% of producers said they expect farm input prices to rise by 20% or more and 36% said they think input prices will rise by 30% or more. Responding to a related question, just over one-fourth (27%) of producers say they’ve had difficulty purchasing crop inputs for the 2022 crop season. Responses to this question have been consistent since January, with 27 to 30% of producers indicating they faced input supply challenges. Supply chain problems continue to be wide-ranging with herbicides and fertilizer posing the most problems followed closely by farm machinery parts.
Sabrina Halvorson
National Correspondent / AgNet Media, Inc.
Sabrina Halvorson is an award-winning journalist, broadcaster, and public speaker who specializes in agriculture. She primarily reports on legislative issues and hosts The AgNet Weekly podcast. Sabrina is a native of California’s agriculture-rich Central Valley.