Current Conditions in Farm Country Reflected in Latest Barometer
The Purdue University/CME Group Ag Economy Barometer farmer sentiment index declined 5 points to a reading of 112 in September. The decline in farmer sentiment was primarily the result of producers’ weakened perception of current conditions, as the Current Conditions Index declined 9 points to 109.
The Index of Future Expectations also weakened slightly, declining 3 points from a month earlier to a reading of 113. Concerns about input costs, and in some cases, availability are key factors behind the relative weakness in this month’s farmer sentiment with a growing number of producers expressing concern about the impact of rising interest rates on their farm operations.
Higher input costs remain the number one concern among survey respondents. In September, 44% of respondents chose “higher input costs” as their number one concern, while 23% chose “rising interest rates,” and 14% chose “availability of inputs.” When asked to look ahead to 2023, the largest share (38%) of producers expect input prices to rise from 1% to 9%, compared to 2022 prices. Meanwhile, nearly a fourth (24%) of producers expect input prices to rise from 10% to 19%, and 9% of survey respondents said they expect an input price rise of 20% or more.
The Farm Capital Investment Index declined to a record low of 31 in September, as producers continue to indicate now is not a “good time” to make large investments in their farming operations. This month the Short-Term Farmland Value Expectations Index fell 5 points to 123 and the Long-Term Farmland Value Expectations Index fell 7 points to 139. Compared to a year ago, the short-term index is down 21%, while the long-term index has fallen 12% over the same time frame.
The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between September 19-23.