- Sentiment Decline: The Ag Economy Barometer index fell 8 points to 115 in August, indicating weaker producer sentiment.
- Interest Rates: 60% of surveyed producers expect interest rates to rise, affecting their outlook.
- Top Concerns: Higher input prices and rising interest rates are the main concerns for producers in the next 12 months.
- Investment Index: The Farm Capital Investment Index fell 8 points, reflecting hesitancy in making new investments.
- Farmland Values: Despite concerns, producers remain optimistic about farmland values in the short and long term.
- Carbon Contracts: A small percentage of corn and soybean growers are engaging in carbon contracts, but payment levels are a concern.
The Purdue University/CME Group Ag Economy Barometer, a key indicator of producer sentiment in the U.S. agriculture sector, reported a decline in August 2023. The index fell by 8 points to a reading of 115, reflecting weaker perceptions of current farm conditions and the broader agricultural landscape.
Key Indices Show Decline
The Current Conditions Index dropped 13 points to 108, while the Future Expectations Index decreased 5 points to 119. The survey was conducted between August 14-18, 2023.
Factors Influencing Sentiment
James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, attributed the decline to “rising interest rates and concerns about high input prices.” According to the survey, 60% of the producers expect interest rates to rise in the upcoming year.
Top Concerns for Producers
When queried about their primary concerns for the next 12 months, producers cited higher input prices (34% of respondents) and rising interest rates (24%). Only 20% were concerned about declining commodity prices.
Investment and Financial Performance
The Farm Capital Investment Index also took a hit, falling 8 points to 37. Meanwhile, the Farm Financial Performance Index remained relatively stable, declining just one point to 86.
Farmland Values and Carbon Contracts
Despite concerns about rising interest rates, producers are cautiously optimistic about farmland values. Additionally, 6% of corn and soybean growers have discussed receiving payments for capturing carbon on their farms, though only 2% have signed a carbon contract.
The full Ag Economy Barometer report is available on Purdue’s website, along with monthly updates and webinars for a more detailed analysis.