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 The Index of Current Conditions declined 12 points to a reading
of 140 and the Index of Future Expectations fell 16 points to a
reading of 116. 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 Sept. 27-29.
The Farm Financial Performance Index was unchanged from last
month with a reading of 110. However, examining the detailed
responses reveals there was a shift among producers with regard
to their farms’ financial performance. In September, fewer farms
said they expected their farm’s financial performance to match
last year’s, while the percentages of producers expecting both
worse and better financial performance rose.
“Although the combined responses left the Farm Financial
Performance Index unchanged from a month earlier, the increasing
divergence in expectations among respondents from August to
September could reflect differences in how individual farms
managed risk in a period of rapidly fluctuating commodity
prices,” said James Mintert, the barometer’s principal
investigator and director of Purdue University’s Center for
Commercial Agriculture.
The decline in farmer sentiment spilled over into the Farm
Capital Investment Index, which declined 10 points to a reading
of 43, down 50% since the beginning of the year and the lowest
investment index reading since April 2020. Fewer farmers this
month said they planned to increase their machinery purchases
than on the August survey as just 8% of respondents plan to
increase purchases, down from 10% last month. In a follow-up
question, over half (55%) of respondents reported that their
farm machinery purchase plans have been impacted by low farm
machinery inventories, likely contributing to weak sentiment
regarding whether now is a good time to make large investments.
Although plans for machinery purchases fell, producers’ plans
for new construction rose this month with 13% expecting to
increase construction of grain bins and farm buildings, up from
8% in August.
Producer concerns about rising input costs rose sharply this
month with over one-third of respondents saying they expect
input prices to rise by more than 12% in the coming year, which
is six times the average farm input inflation rate of the last
decade. Inflation expectations were higher this month across the
board with the percentage of respondents expecting input
inflation to rise above 12% doubling since July with an increase
to 34%, up from 21% last month.
Despite September’s decline in farmer sentiment, farmers remain
bullish about farmland values. The Short-Term and Long-Term
Farmland Values Expectations Indices rose this month, with the
long-term index hitting a record-high reading of 159, which is 4
points higher than the previous month. The
short-term index rose 9 points to 155, which is its
third-highest reading since data collection began in 2015.
Additionally, about one-half of corn/soybean growers continue to
say they expect farmland cash rental rates to rise above 2021
levels in 2022. Among growers who expect cash rents to increase,
44% said they expect rental rates to rise from 5 to less than
10%, and three out of ten respondents indicated they expect
rates to rise by 10% or more.
In early 2020, about 70% of producers expected agricultural
exports to increase over the next five years. Since then, farmer
expectations regarding future agricultural trade prospects have
continued to weaken with only a few exceptions. September
recorded the lowest percentage (37%) of growers expecting
agricultural exports to increase since the question was first
posed early last year. Concerns regarding the future of
agricultural trade could be another factor behind weakness in
the Future Expectations Index.
[to top of second column] |
Read the full Ag Economy Barometer report. The site
also offers additional resources – such as past reports, charts and
survey methodology – and a form to sign up for monthly barometer
email updates and webinars.
Each month, the Purdue Center for Commercial Agriculture provides a
short video analysis of the barometer results. For even more
information, check out the Purdue Commercial AgCast podcast. It
includes a detailed breakdown of each month’s barometer, in addition
to a discussion of recent agricultural news that affects farmers.
The Ag Economy Barometer, Index of Current Conditions and Index of
Future Expectations are available on the Bloomberg Terminal under
the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
About the Purdue University Center for Commercial Agriculture
The Center for Commercial Agriculture was founded in 2011 to provide
professional development and educational programs for farmers.
Housed within Purdue University’s Department of Agricultural
Economics, the center’s faculty and staff develop and execute
research and educational programs that address the different needs
of managing in today’s business environment.
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[Writer: Torrie Sheridan
Source: James Mintert] |
