WEST LAFAYETTE – Farmer sentiment weakened again in October as the Purdue University / CME Group Ag Economy Barometer fell 10 points to a reading of 102.
Both barometer sub-indices have declined this month. The Current Conditions Index fell 8 points to a reading of 101, while the Future Expectations Index fell 11 points to a reading of 102. The monthly “Ag Economy Barometer” is calculated from responses to a telephone survey of 400 US agricultural producers. This month’s survey was conducted October 10-14.
James Mintert, the barometer’s principal investigator and director of the Center for Commercial Agriculture at Purdue University, said: “Concerns about rising interest rates rose again in October and added to uneasiness among producers worried about the impact read about farm operations.
“Additionally, difficult shipping conditions throughout the Mississippi River valley have hampered exports recently, and the corresponding widespread weakness in base levels of corn and soybeans could contribute to significant discomfort on financial performance.”
Producer concerns about the financial performance of their farms was one of the main drivers of weakening sentiment in October. The Farm Financial Performance Index fell 13 points this month to 86 and was a distillation of producer concerns about high input costs combined with weaker commodity prices. Looking ahead to next year, more than 40% of producers saw high input costs as their biggest concern, followed by 21% who chose higher interest rates, 13% who chose lower production costs and 13 % who chose input availability.
After plunging to a new record low last month, the Farm Capital Investment Index improved seven points this month to a reading of 38. Producers who considered this a bad time for major investment revealed that increased prices for agricultural machinery and new construction (40% of respondents) was the main reason for the negative outlook, followed by interest rate increases (20%) and uncertainty about firm profitability (17%).
Producers’ expectations for short-term and long-term farmland values increased this month. The short-term farmland value expectations index rose 10 points to a reading of 133, while the long-term farmland value index rose five points to 144. The strength in both indices comes on the heels of reports from farmland auctions around the Corn Belt that is the land. values are setting new records again this fall. Even with this month’s increase, both indices remain weaker than a year ago. The short-term index this month was 15% lower and the long-term index was 11% lower than in October 2021.
Discussions about farm policy are taking place as Congress prepares to debate a new Farm Bill in 2023. As a result, several questions related to farm policy were included in this month’s barometer survey.
Crop producers were asked which two policies or programs would be most important to their farms in the next five years. More than a third (36%) of crop producers chose interest rate policy as the most important policy issue for their farming operations, followed by crop insurance programs (27%), environmental policy (16%), conservation policy ( 11%). ) and climate policy (10%).
When asked how effective the current ARC-County and Cost Loss Coverage (PLC) programs are in providing a financial safety net, 72% of respondents rated the two programs as either “somewhat effective” (61% ) or “very effective” (11). %). When asked the same question about crop insurance, 84% of respondents rated it as either “somewhat effective” (56%) or “very effective” (28%).
Read the full Ag Economy Barometer report at ag.purdue.edu/commercialag/ageconomybarometer. The site also offers additional resources – such as past reports, charts and survey methodologies – and a sign-up form for monthly email barometer updates and webinars.
Each month, the Purdue Center for Commercial Agriculture provides a short video analysis of barometer results. For more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of the monthly barometer, in addition to a discussion of the latest agricultural news affecting 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.