Farmer confidence rises during rising commodity prices; production cost concerns remain

Farmer sentiment continues to fluctuate month-to-month as the Purdue University/CME Group Farm Economics Barometer rose 6 points to 125 in February, a mirror image of the previous month. The current conditions index fell 1 point to 132, while the future expectations index improved 10 points to 122. The Farm Economy Barometer is calculated monthly from responses from 400 American agricultural producers to a telephone survey. This month’s survey was conducted February 14-18, days before Russia invaded Ukraine.

The agricultural financial performance index was unchanged in February at 83. However, the sharp drop in the index, down 27% from the end of 2021 to 2022, indicates that producers expect the performance financial performance in 2022 will be worse than in 2021. The financial index is generated based on producers’ responses as to whether they expect their farm’s current financial performance to be better, worse, or about the same. same as the previous year.

“These survey responses suggest that concerns about soaring production costs and supply chain issues continue to outweigh the impact of the raw material price hike that took place this winter. “, said James Mintert, principal investigator of the barometer and director of the Center for Purdue University. Commercial farming.

Rising input costs have consistently been the top concern identified by farmers over the past six months, according to results from the Farm Economics Barometer survey. To better understand producers’ concerns, this month’s respondents were given a more detailed set of possible answers when answering this question. While a majority still see input costs as their main concern (47%), they are followed by falling commodity prices (16%), environmental policy (13%), agricultural policy (9%) , climate policy (8%), and the impact of COVID-19 (7%).

Tight machine inventories continue to be a problem. In February, more than 40% of producers said low inventories of farm machinery were holding back their investment plans. While construction plans for farm buildings and grain elevators were more optimistic this month, 56% still said their construction plans for new construction were lower than a year earlier.

Thirty percent of corn and soybean growers say they have had difficulty purchasing agricultural inputs from their suppliers. In a follow-up question posed to corn and soybean growers who said they had difficulty sourcing inputs, herbicides were the most problematic inputs at source, followed by fertilizers and farm machinery parts. To learn more about how crop growers are responding to soaring fertilizer prices, corn growers were again asked if they plan to change their nitrogen fertilizer application rate in 2022 from the rate used in 2021. A third of corn growers in this month’s survey said they plan to use a lower rate of nitrogen application this year than in 2021, compared to 37% of growers in corn that said they planned to reduce their rate of nitrogen application during a survey in January.

Each winter, the barometer survey asks producers to project the annual growth rate of their farm over the next five years. In 2022, 53% said they have no plans to grow or plan to retire/leave in the next five years, 19% expect the growth rate their farm’s annual growth rate is between 5% and 10% and while 18% expect their farm’s annual growth rate to be below 5%.

The need for better broadband coverage in rural areas has been highlighted in several state and national legislative proposals. The February barometer survey included a question asking respondents to characterize the quality of their farm’s Internet access. Only three out of 10 respondents said they had “high quality” Internet access, 41% said “average quality”, 16% chose “poor quality” in the survey and 12% said they don’t. had no internet access at all. Responses to this question suggest that nearly three out of 10 farms in this month’s survey are unable to take advantage of many applications and services that require reasonable quality Internet access.

Read the full Agricultural Economics Barometer report. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly email updates and Barometer webinars.

Each month, the Purdue Center for Commercial Agriculture offers 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, plus a discussion of recent agricultural news that affects farmers.

Farmer confidence rises during rising commodity prices; concerns about production costs remain.
Infographic credit Purdue/CME Group Ag Economy Barometer/James Mintert.

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