WEST LAFAYETTE, INDIANA, US – The Purdue University/CME Group Ag Economy Barometer farmer sentiment index rose 14 points in August to a reading of 117. The rise in the overall measure of agricultural producer sentiment was driven by increases in both the Index of Current Conditions, which rose 9 points to 118 and the Index of Future Expectations, which climbed 16 points to 116.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This month’s survey was conducted between Aug. 15-19, after the US Department of Agriculture released both the August Crop Production and World Agricultural Supply and Demand Estimates reports.
“Producers in the August survey were less worried about their farm’s financial situation than in July, although they remain concerned about a possible cost/price squeeze,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
This month, more producers indicated they are expecting better financial performance for their farms in 2022 and the upcoming year, as the Farm Financial Performance Index improved 11 points to a reading of 99. Both corn and soybean prices rallied from their July lows into mid-August which, along with expectations for good yields, helped explain some of the improvement in financial performance expectations.
At the same time, there continues to be a tremendous amount of uncertainty among producers regarding the future cost of items they purchase both for their farms and family usage. When asked about their biggest concerns for the next year, over half (53%) of respondents chose higher input costs, followed by rising interest rates (14%), input availability (12%), and lower output prices (11%).
On the farm level, there is a big disparity in opinions among farmers regarding whether input prices will retreat or escalate in 2023. Approximately 40% of producers expect crop input prices in 2023 to be either unchanged or possibly decline by as much as 10%, compared with 2022. Just over half of all producers expect input prices to rise from 1% to 20%.
At the consumer level, nearly half (48%) of respondents said they expect the rate of inflation for consumer items during the next 12 months to be in the 0% to 6% range. Compared to previous barometer surveys, more producers this month said they expect inflation to be in the upper end of that range than those who felt that way earlier this year.
Producers continue to view now as a bad time to make large farm machinery and building investments. In a follow-up question, nearly half (49%) of those who said it is a bad time for investing cited increasing prices as the primary reason.
Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer.