U.S. farmers increasingly pessimistic about the economy

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WEST LAFAYETTE, INDIANA, USA – The Purdue University / CME Group farm economy barometer fell 5 points in November to 116 as producers remained pessimistic about the current and future prospects for the farm economy.

The current conditions index fell 7 points in November to 128 and the future expectations index fell 4 points to 110. November marked the lowest reading of 2021 for all three measures of producer sentiment. barometer is 30% lower than in November 2020.

The Agricultural Economy Barometer is calculated monthly from the responses of 400 American agricultural producers to a telephone survey.

“Farmers face a sharp increase in production costs coinciding with fluctuating crop and livestock prices, the prospect of environmental and fiscal policy change, uncertainty over COVID-19, as well as a host of other issues, all of which negatively impact farmer sentiment, ”said James Mintert, senior barometer researcher and director of the Center for Commercial Agriculture at Purdue University.

Growing costs of production, including those of fertilizers, agricultural machinery, seeds and fuel, are of growing concern to farmers. For example, in November, 43% of survey respondents said they expected farm input prices to increase by more than 16% in the coming year. This compares to the real average rate of agricultural input price inflation over the past decade of less than 2%.

Supply chain problems could be responsible for a decline in the agricultural capital investment index. The index fell 7 points to 39, the lowest since April 2020. In November, 44% of producers said their plans to purchase farm machinery were affected by low inventories of farm machinery. When asked what their biggest concerns are for their farm operation in the coming year, almost half (47%) of survey respondents chose higher input costs.

Unlike broader sentiment measures, the Farm Financial Performance Index rose 2 points to 106 in November, 10% above its low in June 2021.

“Compared to late spring, strong fall crop yields and strong wheat prices have helped to increase crop income and profitability estimates for 2021, compared to a year ago.” , said Mintert.

Producers remain optimistic about farmland values ​​over the next 12 months and the next five years, as indices of short-term and long-term farmland value expectations remain near their highs.

“Strong cash flow from crops in 2021, low interest rates and, perhaps, growing concerns about inflation continue to propel the value of farmland up,” Mintert said.

Concerns about government policy and regulations remain high among farmers, as 82% of respondents said they expected more restrictive environmental regulations, 74% expected higher property taxes and 77% expected to an increase in income taxes in the years to come. These percentages compare to the October 2020 survey results, when only 41% of producers expected more restrictive environmental regulations and 35% expected higher property taxes in the next five years.

Read the full report at https://purdue.ag/agbarometer.

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