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Farmer sentiment improves slightly despite rising costs

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Farmer sentiment has improved marginally alongside current conditions and future expectations. However, these indexes are all still 23 to 24 percent lower than a year ago. Among the top concerns for producers are higher input prices, lower crop pricing, interest rates, and availability of units.

In total, the Ag Economy Barometer rose six points since last month. Forty-one percent of producers still voice higher input costs as their top concern.

The Farm Financial Performance Index rose to 88 — five points higher than last month but still well below last year’s index. However, nearly half of the respondents predicted worse conditions in the upcoming year. The Farm Capital Investment Index stayed the same as last month, hovering at a record low.

Focusing on costs, 44 percent of producers attribute disinterest in investments due to increased prices for farm machinery and construction costs. Only 15 percent of respondents said that farm profitability was a reason for lackluster investing, and 14 percent said rising interest rates were the primary reason they see now as a wrong time to make significant investments. 

Long-term and short-term farmland values conflict with each other strongly this month. Negativity in the short run is harsher, with farmland expected values declining to 127, down from 136 last month. However, farmers still predict a rise in farmland values over the next few years due to non-farm investor demands and inflation, raising the Long-Term Farmland Value Expectations Index nine points from 141 to 150 in the past month. 

When asked about what changes they will make to crops, nearly one in four producers said they would change their crop mix in 2023 due to higher input prices. Over half of these respondents (53 percent) plan to devote additional acreage to soybeans. 

On the other hand, 27 percent plan to devote more acres to corn, and 19 percent reported plans to increase wheat planting. Of producers who planted winter wheat last year, 24 percent surveyed said they planned to increase their winter wheat acreage for harvest. 

Overall, farmer sentiment remains weak. While a modest improvement from June’s reading can be found in the 6-point rise to the Barometer, producers still expect things to worsen over the coming year. 

The Ag Economy Barometer is calculated monthly from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between July 11 and 15.

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