The Purdue College/CME Group Ag Financial system Barometer farmer sentiment index declined 5 factors to a studying of 112 in September. The decline in farmer sentiment was primarily the results of producers’ weakened notion of present situations, because the Present Circumstances Index declined 9 factors to 109. The Index of Future Expectations additionally weakened barely, declining 3 factors from a month earlier to a studying of 113. The Ag Financial system Barometer is calculated every month from 400 U.S. agricultural producers’ responses to a phone survey. This month’s survey was performed between September 19-23.
“Issues about enter prices and, in some circumstances, availability are key elements behind the relative weak spot on this month’s farmer sentiment,” stated James Mintert, the barometer’s principal investigator and director of Purdue College’s Middle for Business Agriculture. “Nevertheless, a rising variety of producers are additionally involved in regards to the impression of rising rates of interest on their farm operations.”
Greater enter prices stay the primary concern amongst survey respondents. In September, 44% of respondents selected “increased enter prices” as their primary concern, whereas 23% selected “rising rates of interest,” and 14% selected “availability of inputs.” When requested to stay up for 2023, the most important share (38%) of producers anticipate enter costs to rise from 1% to 9%, in comparison with 2022 costs. In the meantime, practically a fourth (24%) of producers anticipate enter costs to rise from 10% to 19%, and 9% of survey respondents stated they anticipate an enter value rise of 20% or extra.
The Farm Capital Funding Index declined to a report low of 31 in September, as producers proceed to point now is just not a “good time” to make massive investments of their farming operations. To grasp why they felt that manner, a follow-up query was posed to farmers who reported now being a “unhealthy time” to make massive investments. For the third month in a row, producers overwhelmingly (46%) stated it was as a consequence of rising costs for farm equipment and new development; nonetheless, 21% indicated that “rising rates of interest” have been a major motive, up from 14% who cited rates of interest again in August.
Regardless of that unfavourable perspective, fewer producers plan to scale back their farm equipment purchases. Since peaking in March 2022 at 62%, the share of producers who plan to scale back their equipment purchases in comparison with a yr earlier has been declining, dipping to 47% in September. Their plans for farm constructing purchases inform an identical story. Because the March 2022 excessive of 68%, producers who deliberate to scale back their constructing and grain bin purchases has fallen to 56% in September.
Producers’ perspective on farmland values continues to melt. This month the Brief-Time period Farmland Worth Expectations Index fell 5 factors to 123 and the Lengthy-Time period Farmland Worth Expectations Index fell 7 factors to 139. In comparison with a yr in the past, the short-term index is down 21%, whereas the long-term index has fallen 12% over the identical time-frame. In a follow-up query posed to respondents who anticipate farmland values to rise over the subsequent 5 years, non-farm investor demand (60%) stays their major motive for the rise.
This month’s survey included a sequence of questions to know producers’ cowl crop utilization. Almost six out of 10 (57%) respondents stated they presently plant cowl crops on a portion of their farmland, whereas roughly one out of 4 producers stated they’ve by no means planted a canopy crop. Most producers who report planting cowl crops say they solely plant them on a portion of their farmland with half indicating they plant on 25% or much less of their acreage. Nevertheless, some farms report extra intensive use of canopy crops as practically a fourth of respondents stated they plant cowl crops on over 50% of their farms’ acreage. A big share (40%) of producers who reported planting cowl crops this month stated they’ve been planting cowl crops for five years or much less, whereas 28% of respondents stated they’ve been planting cowl crops for greater than 10 years. The explanations for planting cowl crops range, with 37% citing “enhance soil well being” and 33% citing “enhance erosion management” as the first motivators. Simply 5% of canopy crop customers indicated “carbon sequestration” as a motivation for planting cowl crops.
The complete Ag Financial system Barometer report could be accessed right here. The positioning additionally gives extra assets – equivalent to previous stories, charts and survey methodology – and a kind to enroll in month-to-month barometer electronic mail updates and webinars.
