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Farmer Sentiment Unchanged Despite High Costs, Rising Interest Rates

Dan Agri-Business, Economy

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There wasn’t much movement in the November Purdue University/CME Group Ag Economy Barometer. The index read 102 for the month, unchanged from October. However, the Current Conditions Index dropped three points to 98, while the Future Expectations Index rose two points to a reading of 104.

Even though producer sentiment was the same in November, producers are continuing to look at their bottom line and rising interest rates. Combine that with high input and energy costs, and there’s a lot of anxiety at the farm level. Forty-two percent of the survey respondents list high input costs as their top concern in the year ahead. The Farm Capital Investment Index dropped to a record low of 31 in November.

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Almost 80 percent of the respondents said it’s a “bad time” to make large investments in farm machinery. Just over one-fourth of the respondents have made operational changes due to rising energy prices.

(From the National Association of Farm Broadcasters)


High Input Costs and Rising Interest Rates Top Concerns As Farmer Sentiment Remains Unchanged

December 6, 2022

James Mintert and Michael Langemeier, Purdue Center for Commercial Agriculture

Farmer sentiment was unchanged in November as the Purdue University-CME Group Ag Economy Barometer Index came in at a reading of 102, the same as in October. There was however a slight shift in underlying sentiment as the Index of Current Conditions declined 3 points this month to a reading of 98 while the Index of Future Expectations rose 2 points to 104. This month’s survey was conducted the week following the November U.S. elections but, unlike the period immediately following the two most recent presidential elections, there did not appear to be a noticeable sentiment swing attributable to the election outcomes. 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 November 14-18, 2022.

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

The Farm Financial Performance Index improved modestly this month to 91, up 5 points from last month, but that still left the index 14% below its year ago level of 106. The relatively weak index reading is attributable to the fact that more producers continue to say they expect their farms’ financial performance to be worse this year than last year compared to those who expect better performance. However, nearly half (45%) of producers say they expect financial performance this year to match 2021’s. Combined, this means that over two-thirds (68%) of producers say they expect financial performance in 2022 to match or exceed that of the prior year, providing a more positive perspective than that provided by the index examined in isolation. Concerns about high input costs continue to weigh on producers’ minds with 42% of respondents in this month’s survey citing that as their top concern in the year ahead. Just over one-fifth (21%) of respondents chose rising interest rates as a top concern while input availability and declining commodity prices were chosen as a top concern by 14% of respondents.

Figure 3. Farm Financial Performance Index, April 2018-November 2022.

The Farm Capital Investment Index dropped back to its record low of 31 in November. This month’s decline of 7 points pushes the reading back to its September level, erasing the modest rise in the index that took place in October. It’s become increasingly clear that the index is capturing the perception among producers that this is not a good time to make large investments because prices for farm machinery and construction are …..

Read the complete November Purdue University-CME Group Ag Economy Barometer Index report.