Farmer sentiment weakens as concerns over production costs rise
LAFAYETTE OUEST, Ind. and CHICAGO, December 7, 2021 / PRNewswire / – The Purdue University/ CME Group Ag Economy Barometer slipped 5 points in November to 116 as producers continue to be pessimistic about the current and future outlook for the agricultural economy. The Index of current conditions fell by 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 and, year-over-year, the barometer is 30% lower than in November 2020 . The Agricultural economy barometer is calculated monthly from the responses of 400 U.S. agricultural producers to a telephone survey. This month’s survey was conducted between November 15-19, 2021.
“Farmers face a sharp increase in production costs coinciding with fluctuating crop and livestock prices, the prospect of a change in environmental and fiscal policy, uncertainty over COVID-19, as well as a host of other issues, all of which have a negative impact on farmers’ sentiment, “mentioned James mintert, principal researcher of the barometer and director of Purdue University Commercial agriculture center.
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 drop in 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 the larger measures of sentiment, the Agricultural financial performance index rose 2 points to 106 in November, 10% above its low reading of June 2021 a year ago, âMintert said.
Producers remain very optimistic about farmland values ââover the next twelve months and the next five years, as indices of short-term and long-term farmland value expectations remain near their highs.
Mintert suggests, âStrong cash flow from crops in 2021, low interest rates and, perhaps, growing concerns about inflation continue to drive farmland values ââhigher. “
Surprisingly enough, given concerns about rising input costs, 52% of corn / soybean producers expect cash rental rates to increase in 2022, up from 43% in October. This is the highest percentage of producers stating that they expect rental rates to increase in 2022 since May 2021 investigation.
Interest and awareness of leasing farmland for solar power projects is on the rise. In November, 11% of all respondents said they had had a discussion with one or more companies about leasing farmland for solar power generation; however, reported rental rates continue to vary widely. In November, 25% of growers who said they had had discussions with a solar leasing company said they were offered less than $ 500 per acre, while 34% of producers said they were offered a rental rate of $ 1,000 or more per acre.
Concerns about government policy and regulations remain high among farmers. On the November 2021 According to a survey, 82% of those polled said they expected more restrictive environmental regulations, 74% expected higher property taxes and 77% expected higher income taxes in the years to come. to come. These percentages compare with the results of the October 2020 survey when only 41% of producers expected more restrictive environmental regulations and 35% expected higher property taxes in the next five years.
Read the whole Agricultural economy barometer in relation to https://purdue.ag/agbarometer. The site also offers additional resources – such as past reports, charts, and survey methodology – and a form to sign up for monthly Barometer email updates and webinars.
Each month, the Purdue Center for Commercial Agriculture offers a short video analysis of the barometer results, available at https://purdue.ag/barometervideo. For even more information, see the Purdue Commercial AgCast Podcast. It includes a detailed breakdown of each month’s barometer, in addition to a discussion of recent agricultural news affecting farmers. Available now on https://purdue.ag/agcast.
The Agricultural Economy Barometer, Current Conditions Index and Future Expectations Index are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
About Purdue University Commercial Agriculture Center
The Commercial Agriculture Center was founded in 2011 to provide professional development and education programs to farmers. Installed inside Purdue University Department of Agricultural Economics, the faculty and staff of the center develop and execute research and educational programs that meet the different management needs in today’s business environment.
About the CME Group
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Writer: Kami goodwin, 765-494-6999, [emailÂ protected]
Source: James mintert, 765-494-7004, [emailÂ protected]
Purdue University Commercial Agriculture Center: http://purdue.edu/commercialag
CME Group: http://www.cmegroup.com/
Photo caption: Farmer sentiment weakens as concerns over production costs rise. (Purdue/ CME Group Ag Economy Barometer /James mintert). https://www.purdue.edu/uns/images/2021/ag-barometer1121OG.jpg
SOURCE CME Group