As Input Costs Keep Rising, Farmer Confidence Falls
American farmers currently are the least optimistic about their industry since the uncertain days of April 2020.
The most recent Purdue University/CME Group Ag Economy Barometer revealed a fairly grim sentiment among the 400 farmers who are polled monthly for the ongoing metric of the U.S. ag economy.
The overall reading of the Barometer dipped precipitously in one month, from 121 in April 2022 to 99 in May. This near-record low reading is edging close to the bleak score of 96 posted in April 2020.
Among additional results of the May 2022 survey:
- The Barometer’s Farm Financial Performance Index has fallen 41% from its all-time high (since its inception in 2015) of 138 in April 2021. The percentage of producers who said they expect their business’ financial performance to decline in 2022 compared to last year jumped from 29% in April 2022 to 38% in May.
- Farmers are overwhelmingly putting the brakes on asset purchases and capital investments. In the current survey, only 13% of respondents said this is a good time to make large investments in their operations, while 78% said they viewed it as a bad time to invest in machinery and buildings. Overall, the Barometer’s Farm Capital Investment Index hit an all-time low of 35.
- More than half (57%) of producers said they expect a 30% or more increase in farm input expenses for 2022 versus 2021. For 2023, nearly 39% of respondents expected input costs to rise at least another 10% year-over-year.
Purdue University ag economist Jim Mintert, who manages the Barometer, said May’s weakness in producer sentiment appears to be driven by the rapid rise in production costs and uncertainty about where input prices are headed.
If there’s one word that describes the ag economy of the past two years, it’s “volatility.” In the two-year stretch between near-historic lows in the Barometer’s overall reading, it also hit its all-time high (since its inception in 2015) of 183 in October 2020 – a telling indication of the economic rollercoaster American farmers have been riding as of late.
