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Farmer sentiment declines in January as commodities weaken

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Image courtesy of USDA

In January 2024, farmer sentiment declined, with the Purdue University-CME Group Ag Economy Barometer Index dropping to 106, 8 points lower than the previous month. The January Ag Economy Barometer survey was conducted from January 15-19, 2024.

This downturn reflected a more pessimistic view among producers regarding the current situation and future farm prospects. Specifically, the Current Conditions Index fell by 9 points, while the Future Expectations Index dropped by 7 points compared to December. The main driver behind this shift was anticipated lower farm income in 2024. This sentiment was echoed across all indices, with the Farm Financial Performance Index plummeting to 85, a 12-point decrease from the previous month. 

Farm Financial Performance Index falls for the first time since May

After showing some improvement towards the end of 2023, the Farm Financial Performance Index experienced a downturn, marking its lowest point since May of 2923. 

The index dropped by 7 points from December to January, mainly due to a shift in sentiment among farmers regarding their income prospects for the upcoming year compared to 2023. 

Concerns about lower crop and livestock prices emerged as a top worry among farmers, with 28 percent expressing apprehension, matching the percentage of farmers concerned about rising input costs.

Unsurprisingly, given producers’ concern about farm incomes, the Farm Capital Investment Index fell to 35, 8 points lower than in December. While fewer farmers are attributing rising interest rates to their belief that now is a bad time to invest, they’re pointing toward the rising cost of farm machinery and equipment. 

Farmland value expectations dropped slightly

The Short-Term Farmland Value Expectations Index decreased to 115, marking a 6-point drop from December, while the long-term index remained relatively stable at 150. Despite the decline, both indices indicate that more farmers surveyed anticipate an increase rather than a decrease in farmland values in the near and long term.

However, a closer look at the survey responses reveals an interesting shift. The percentage of farmers expecting a decline in farmland values in the current year rose to 16 percent in January, up from 10 percent in October. Conversely, the percentage of farmers anticipating higher farmland values decreased slightly from 35 percent to 31 percent.

A small percentage of survey respondents are involved in carbon capture discussions

In this month’s survey, 8 percent of respondents indicated that they have been involved in discussions regarding carbon capture. Examining data from nine barometer surveys conducted between 2021 and 2023, which included this question, revealed a consistent level of interest among producers, ranging from 2.6 percent to 9 percent.

Most producers (61 percent) who reported engaging in discussions with companies this month stated that they were offered a payment rate of less than $10 per metric ton, while 12 percent were offered a rate of $30 or more per ton.

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