The Purdue College/CME Group Ag Economic system Barometer dipped 5 factors to a studying of 125 in February. Farmers’ views relating to each present circumstances on their farms and their expectations for the long run additionally weakened. The Index of Present Situations fell 2 factors to 134 and the Index of Future Expectations declined 6 factors to 121. The Ag Economic system Barometer is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was carried out between February 13-17.
“Elevated concern over the chance of falling output costs, rising rates of interest, and uncertainty over the long run development of U.S. agricultural exports is weighing on producers’ minds,” mentioned James Mintert, the barometer’s principal investigator and director of Purdue College’s Heart for Business Agriculture.
Producers’ expectations for his or her farms’ monetary efficiency in 2023 in comparison with 2022 weakened in February. The Farm Monetary Efficiency Index declined 7 factors to a studying of 86. Farmers proceed to level to issues about larger enter prices (38% of respondents), rising rates of interest (24% of respondents), and decrease output costs (18% of respondents), as their greatest concern for the yr forward.
Agricultural exports have been a key supply of development for U.S. agriculture for many years. Starting in 2019, the Ag Economic system Barometer survey routinely included a query asking producers about their expectations for agricultural exports within the upcoming 5 years. Since peaking in 2020, when simply over 70% of respondents mentioned they anticipated exports to extend within the upcoming 5 years, the share of farmers searching for exports to develop over time has drifted decrease. In February, simply 33% of survey respondents mentioned they anticipate exports to extend, which leads Mintert to counsel {that a} insecurity in future agricultural export development is contributing to weakened sentiment amongst producers.
Regardless of robust farm revenue, the February studying of the Farm Capital Funding Index modified little, rising one level to a studying of 43. This month, 72% of producers mentioned it’s a “unhealthy time” to make giant investments of their farming operation, whereas simply 15% reported it’s a “good time” to make such investments. The disparity between producers’ responses to the query and precise farm tools gross sales continues to be centered on prices. Of those that mentioned now’s a “unhealthy time” to make giant investments, 45% of respondents mentioned it was due to a rise in costs for farm equipment and new development, whereas 27% of respondents mentioned it was due to “rising rates of interest.”
Producers’ expectations for short-term and long-term farmland values fell in February however stay constructive. The Brief-Time period Farmland Worth Index declined one level to 119 whereas the Lengthy-Time period Farmland Worth Index dropped 5 factors to 137. Though each indices stay above 100, indicating a constructive outlook on farmland values, the share of producers who mentioned they anticipate values to say no over the following 5 years reached 19% this month, the best share since this query was first routinely included in barometer surveys in 2019. Nonetheless, over half (56%) of respondents anticipate values 5 years from now to be larger than in the present day. This month, simply 33% of respondents mentioned they anticipate values to rise within the subsequent 12 months, whereas 14% mentioned they anticipate values to weaken.
Every February, the barometer survey features a query centered on farm development, asking respondents in regards to the annual development fee they anticipate for his or her farm over the following 5 years. This yr 49% of respondents mentioned their farm both had “No plans to develop” (33%) or “Plan to exit or retire” (16%). Of these respondents who anticipate their farms to develop, 19% anticipate it to develop by “Lower than 5% yearly” and 22% mentioned they anticipate it to develop by “5 to 10% yearly.”
Leasing of farmland for photo voltaic power manufacturing is a sizzling subject in lots of components of the U.S. Because the Spring of 2021, the barometer survey has periodically included questions in regards to the discussions that farmers are having with photo voltaic firms. In each the January and February 2023 surveys, simply over 10% of respondents mentioned they’d mentioned a photo voltaic lease with an organization. Of those that indicated they’d been in discussions, almost half (48%) of respondents mentioned they have been provided a lease fee above $1,000 per acre, up from a low of 27% and a excessive of 35% in earlier surveys. This month’s survey findings counsel firms have began to extend the lease charges they’re keen to pay.
The complete Ag Economic system Barometer report will be discovered right here.
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