Weakening income prospects lead to drop in farmer sentiment
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Agriculture producers nationwide are expressing growing concerns over farm income prospects, according to the latest Purdue University/CME Group Ag Economy Barometer.
The barometer is calculated monthly from a telephone survey of 400 agricultural producers across the country. Purdue says the outlook for a bountiful fall harvest is being more than offset by declining crop and livestock prices.
The barometer fell 13 points to a reading of 100 in August, which James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, said echoes levels seen in late 2015 and early 2016.
“Weakness in the barometer and related indices provide a signal that farmers are concerned about the possibility of extended weakness in farm incomes, similar to what took place from 2015 to 2019,” Mintert said in written remarks.
The survey was conducted from Aug. 12-16. The results show 30% of respondents identified lower commodity prices as their primary concern, up from 20% a year ago. However, 33% cited high input costs as their top concern.
“The top concern continues to be high input costs, but that really hasn’t changed over time,” said Mintert. “The relationship between that lower crop and livestock prices and higher input costs, that’s the narrowest that gap has been since we’ve been collecting data.”
Two of the barometer’s main sub-indices also saw decreases last month. The Index of Current Conditions dropped 17 points to 83, and the Index of Future Expectations at 108 was 11 points lower than a month earlier.
Purdue also noted, however, that concerns about rising interest rates lessened in August, with only 17% identifying it as their top issue, down from 24% last year.
“A little over two-thirds of the people in the survey said they look for interest rates to decline over the course of the next year,” Mintert said. “Fewer people worried about the interest rate environment. More people worried about prices for what they sell.”
Additionally, the Farm Financial Performance fell to its lowest level in over four years, which Purdue said reflects ongoing concerns about weak financial conditions and has led many farmers to say now is not a good time to invest in their operations.
“Farmers have also become less optimistic about farmland values this summer than in recent years,” said Mintert. “The percentage of farmers who think farmland values could decline within the upcoming year has been rising, which is consistent with the weak outlook for financial conditions. The weak capital investment index reading suggests farmers are going to pull back on capital expenditures.”
You can connect to the full results of the survey by clicking here.