NOVEMBER 21, 2023:
The Purdue University Ag Economy Barometer is a monthly survey of 400 different farmers every month.
Dr. James Mintert of Purdue says the most recent survey showed a slight improvement in producer sentiment.
“If you look at the most recent survey, which we did in mid-October, it suggested that there was a modest improvement, really a very small improvement, in farmer sentiment. If you look at it from kind of a longer-term view, farmers’ sentiment right now is quite a bit lower than it was in late 2020 or early 2021, and down somewhat compared to a year ago. And that’s true whether you look at the broader index, which is the ag economy barometer itself, or the sub-indices, the current condition index, or the future expectation index.”
Mintert talks about producers’ chief concerns.
“There’s some concern out there. We asked producers every month in 2023 what their biggest concern is for the upcoming year, and their biggest concern month after month continues to be high input prices. This month, roughly twice as many people chose high input prices as their top concern as chose lower crop and livestock prices.”
He says the concerns may stem from COVID-19 impacts that haven’t gone away yet.
“I think that speaks to the idea that we have not fully recovered from what took place with respect to the pandemic and some of the related trade disruptions that we had and the impact that’s had on the farm economy. And that’s left people in a state where even though farm incomes these last two years have been great, they’re still kind of anxious. They’re worried longer-term about a cost-price squeeze.”
The Purdue University Ag Economy Barometer was started in 2015.
NOVEMBER 8, 2023:
There was a slight uptick in agricultural producers’ sentiment in October, as the Purdue University/CME Group Ag Economy Barometer index rose 4 points to a reading of 110. The modest improvement in farmer sentiment resulted from farmers’ improved perspective on current conditions on their farms as well as their expectations for the future. Farmers in this month’s survey were slightly less concerned about the risk of lower prices for crops and livestock and felt somewhat better about their farms’ financial situation than a month earlier. The Index of Current Conditions rose 3 points to 101 while the Index of Future Expectations rose 5 points to 114. This month’s Ag Economy Barometer survey was conducted from October 16-20, 2023.
Farmers’ more optimistic view of their farms’ financial situation was reflected in the Farm Financial Performance Index, which rose 6 points in October compared to September. This month’s index value of 92 was the highest farm financial performance reading since April and pushed the index 7% above its reading from a year ago. The index’s rise stood in contrast to USDA’s’ forecast for 2023 net farm income to fall below 2022’s income level.
Despite the perception that financial conditions were stronger than a month earlier, the Farm Capital Investment Index fell 4 points in October to a reading of 35. This was the lowest reading of the year for the investment index. In October, nearly 8 out of 10 (78%) respondents said it was a bad time to make large investments in their farm operation, while just 13% of farmers said it was a good time to make large investments. Among those who said it’s a bad time to invest, the most commonly cited reason was rising interest rates, chosen by 41% of respondents, up one point from September. Of those who said it is a good time to make large investments in their farm operation, 24% stated “strong cash flows,” down from 32% who felt that way in September, and 20% pointed to “expansion opportunities” up from 6% in September.
Just over one-third (35%) of producers in this month’s survey said they expect farmland values to rise in their area in the upcoming year, while nearly two-thirds (65%) of survey respondents expect farmland values to rise over the next 5 years. As a result, the Short-Term Farmland Value Expectations Index changed little, dropping just one point compared to a month earlier, while the Long-Term Farmland Value Expectations Index rose three points. Key reasons cited by producers for optimism about farmland values over the next five years continue to be non-farm investor demand, followed by inflation.
Dry weather this past spring and summer stimulated discussions among producers about shifts in long-term weather patterns. This month’s survey asked corn and soybean producers if they have explicitly made any changes in their farming operation in response to changes in long-term weather patterns in their area. Nearly one out of four corn/soybean farmers (24%) in the October survey indicated they implemented changes in their farm operations to better deal with shifting weather patterns. A follow-up question posed only to farmers who said they’ve made changes, asked them to identify the biggest operational changes they’ve made to date. Responses indicated farmers are choosing from among a broad mix of technologies and capital investments to adapt to changing weather patterns, including: increased use of no-till (25% of respondents); changed mix of crops planted (23% of respondents); planted more drought resistant varieties (20% of respondents); installed tile drainage (9% of respondents); and installed irrigation (9% of respondents).
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