Key Takeaways:
- The Purdue University/CME Group Ag Economy Barometer index fell 9 points to 106 in September, indicating a decline in agricultural producers’ sentiment.
- Both the Current Conditions and Future Expectations Indices dropped 10 points, standing below their readings from one year ago.
- High input costs, rising interest rates, and lower crop and livestock prices are the top concerns for farmers.
- The Farm Capital Investment Index saw a small uptick, but 75% of producers still believe now is a bad time for large investments.
- Despite concerns, producers remain optimistic about farmland values, citing non-farm investor demand and inflation as critical reasons for rising values.
A recent survey conducted by Purdue University and CME Group revealed a decline in agricultural producers’ sentiment for the second consecutive month. The Ag Economy Barometer index fell to 106 in September, with producers expressing concerns about their current situation and prospects.
Declining Sentiment Indices
The Current Conditions and Future Expectations Indices declined by 10 points, reaching readings of 98 and 109, respectively. These indices are lower than their readings from the same period last year. James Mintert, the barometer’s principal investigator, attributed the decline to weakening prices for major crops and ongoing concerns about high production costs and interest rates.
Top Concerns for Farmers
High input costs remain a significant concern for farmers, cited by one-third of the survey respondents. This was followed by rising interest rates, chosen by 25%, and lower crop and livestock prices, chosen by 22%. The percentage of producers concerned about lower crop and livestock prices has increased since the beginning of the year.
Investment Climate
The Farm Capital Investment Index saw a slight increase of 2 points, reaching a reading of 39. However, 75% of producers still believe it’s a bad time for large investments, mainly due to rising interest rates and high machinery costs. Notably, the percentage of producers citing rising interest rates as a reason not to invest increased from 35% last month to 40%.
Farmland Value Expectations
Despite the prevailing concerns, producers remain optimistic about farmland values. The Short-Term Farmland Value Expectations Index remained unchanged at 126, while the long-term index rose 2 points to 153. Respondents expect farmland values to continue rising due to non-farm investor demand and inflation.
Additional Insights on Cover Crops
The survey also included questions about cover crops. Over half of the corn and soybean growers plant cover crops primarily for soil health and erosion control. Among those who discontinued using cover crops, reasons included low profitability and insufficient soil benefits.
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Photo by Jesse Gardner on Unsplash
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