Purdue Ag Economy Barometer declines again

Producers express concern over interest rate policy
calendar icon 6 November 2022
clock icon 2 minute read

The Purdue University/CME Group Ag Economy Barometer dropped 10 points in October to a reading of 102 as farmer sentiment further weakened. 

“Concern over rising interest rates grew once again in October and is adding to the unease among producers who are worried about its impact on their farm operations,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Additionally, challenging shipping conditions throughout the Mississippi River valley have hampered exports recently, and the corresponding widespread weakening of corn and soybean basis levels could be contributing to heightened unease about financial performance.”

Weakening sentiment, for the most part, has been driven by producers' concern about the financial performance of their farms as they face a mixture of high input costs and weaker commodity prices. Over 40% of producers polled ranked high input costs as their top concern; 21% mentioned rising interest rates, 13% chose lower output prices, and 13% selected input availability.

Producers’ expectations for short- and long-term farmland values rose this month, however. The Short-Term Farmland Value Expectation Index rose 10 points to a reading of 133, while the Long-Term Farmland Value Index rose 5 points to 144. These numbers follow reports from farmland auction within the Corn Belt that show land values set new records this fall. In comparison to last October's numbers, the short-term index is 15% lower, and the long-term index is 11% lower.

Farm policy questions were included in this month's survey, as Congress prepares for debate on a new Farm Bill in 2023. Crop producers were asked which two policies they think will impact their farm most in the coming five years. More than one-third (36%) of crop producers chose interest rate policy as the most important issue for their farming operation. Some 27% selected the crop insurance program, 16% chose environmental policy, 11% said conservation policy, and 10% said climate policy. For the most part, respondents said current programs such Price Loss Coverage (PLC) and crop insurance are "somewhat effective".

The “Ag Economy Barometer” is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This month’s survey was conducted Oct. 10-14. The full report can be read here.

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