Farmer sentiment dips in June; solar offers increase
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Agriculture producers across the country continue to express concern over their farms’ performance, according to the latest Purdue University/CME Group Ag Economy Barometer. However, many producers noted an increase in the offers they’ve received for leasing their land for solar energy projects.
The barometer is calculated monthly from a telephone survey of 400 agricultural producers across the country. The newest survey was conducted June 17-21.
The June barometer reading was 105, down three points from the previous month and 16 points from the same month last year. Year-to-date, the barometer has averaged 11% lower than the same period in 2023.
The Current Conditions Index increased one point to a reading of 90 in June, following a two-year low in May.
“The impact of rising interest rates on their farm operations has become a bigger concern for producers in recent months,” said Jim Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture. “Interest rate risk and high breakeven levels combined with concerns that crop and livestock prices could weaken are holding back producer sentiment and making producers cautious about making large investments.”
The barometer’s Future Expectation Index fell five points compared to May and is 11 points lower than June 2023.
“When we asked producers what their biggest concerns are for the upcoming year, they continue to point to the risk of high input cost, followed by the risk of low crop and livestock prices, and then followed by rising interest rates,” Mintert said. “When we look at the responses to this question in recent months, it’s clear that more producers are becoming concerned about the impact of rising interest rates on their farm operation than what we saw earlier in the year.”
June’s Farm Capital Investment Index fell three points to a reading of 32, just one point higher than the index’s historical low. Producers again expressed concern over high interest rates, as well as the high cost of farm machinery and buildings as reasons for not making large investments in their farms.
But the June survey looked deeper into farmers’ interest in non-farm uses for their land.
Mintert said 16% of respondents reported having conversations with companies about solar production on their farmland, which is down from 20% the previous month. However, 69% reported receiving offers of $1,000 or more per acre, compared to 55% in May and 27% in June 2021.
June marked the third consecutive month that energy production was included as a potential driver for farmland values, and 10% of respondents said it was a key driver for their farmland.
Researchers also looked into farmers’ interest in carbon capture and storage projects, noting that 8% of respondents reported being approached on the subject.
You can connect to the full Ag Barometer results by clicking here.