farmer sentiment

Interest Rates Help Drive Farmer Sentiment Lower

Dan Economy

farmer sentiment

The Purdue University/CME Group Ag Economy Barometer’s farmer sentiment index dropped five points to 112 in September. The drop in farmer sentiment was primarily the result of producers’ weakened perception of current conditions. The Current Conditions Index dropped nine points to 109, and the Index of Future Expectations dropped three points to 113.

Concerns about input costs and, in some cases, availability are key factors behind the relative weakness in this month’s farmer sentiment. A growing number of producers expressed concern about the impact of rising interest rates on their operations. High input costs were cited as the number one concern by 44 percent of the survey respondents, while 23 percent chose rising interest rates. Another 14 percent of respondents chose input availability as their biggest worry.

The Farm Capital Investment Index also dropped as producers continue to indicate now is not a good time to make large investments in their farms.

(From the National Association of Farm Broadcasters)


Farmer Sentiment Drifts Lower, Rising Interest Rates Contribute to Uneasiness

October 4, 2022

By James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture

The Purdue University-CME Group Ag Economy Barometer index drifted lower to a reading of 112 in September which was 5 points lower than a month earlier. The decline in farmer sentiment was primarily the result of producers’ weaker perception of current conditions as the Current Conditions Index declined to 109, 9 points lower than in August. The Index of Future Expectations also weakened slightly, declining 3 points from a month earlier to a reading of 113. Compared to a year earlier, the barometer this month was 10% lower while producers’ assessment of current conditions was down 22%. These results stand in contrast with future expectations in September which was only 2% weaker than a year ago. 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 September 19-23, 2022, a week or more following USDA’s September Crop Production and World Agricultural Supply and Demand Estimates (WASDE).

farmer sentiment
Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-September 2022.
farmer sentiment
Figure 2. Indices of Current Conditions and Future Expectations, October 2015-September 2022.

Higher input costs are still the number one concern among survey respondents with the shift in U.S. monetary policy rising to the forefront as an issue among U.S. producers. This month 44% of respondents chose “higher input costs” as their number one concern, down from 53% last month. Second on the list of producers’ concerns for the upcoming year was “rising interest rates”, chosen by 23% of respondents, up from 14% in August. Third on the list of concerns was “availability of inputs” chosen by 14% of producers in the survey. The percentage of producers with concerns about input availability has been relatively stable over the last 3 months, ranging from a low of 12% to a high of 15% suggesting this issue is not going away. Interestingly, the percentage of producers choosing “lower crop and/or livestock prices” as one of their biggest concerns declined over the summer. In July 19% of respondents chose it as one of their biggest concerns while just 8% of producers chose it in this month’s survey.

This month’s Farm Financial Performance Index was unchanged from a month earlier at 99 but was still 10% lower than a year earlier. Compared to earlier this year, producers clearly feel better about their farm’s financial performance. Back in May, 38% of respondents said they expected their farm’s financial performance in 2022 to be worse than in 2021. This month that percentage declined to 29% while the percentage expecting better performance rose from 19% in May to 28% this month. Uncertainty surrounding input costs and availability was partly responsible for …..

Read the full Purdue University-CME Group Ag Economy Barometer report.