Ag Economy Barometer: Farmers concerned about costs, supply chain

WEST LAFAYETTE, Ind. — The Ag Economy Barometer dipped five points in November to a reading of 116, down from 121 in October.

“The Index of Current Conditions and Index of Future Expectations both declined, as well as producers continue to be less optimistic about what’s taking place on their farms — not only today, but in the future,” said James Mintert, director of the Purdue Center for Commercial Agriculture.

Supply-chain issues remain a concern among producers, with 44% saying low farm machinery inventories impacted their machinery purchase plans.

Farmers are facing sharp rises in production costs coinciding with fluctuating crop and livestock prices, the prospect of changing environmental and tax policy and uncertainty over COVID-19, as well as a host of other issues, all of which are negatively impacting farmer sentiment, according to the barometer’s report.

“Rising farm input prices are clearly an issue in agriculture,” Mintert said. “In this month’s survey, 55% of the producers in our survey said they expect to see farm input prices rise 12% or more over the upcoming year.

“We asked farmers what their biggest concern is for their farming operation in the upcoming year. Forty-seven percent of producers in the survey said their concern is higher input costs.”

The Farm Financial Performance Index did improve slightly to a reading of 106 compared to 104 last month.

“Compared to late spring, strong crop yields for fall harvested crops and strength in wheat prices helped push 2021 crop revenue and profitability estimates up, compared to one year ago,” the report states.

The Farm Capital Investment Index declined to one of the lowest readings since the start of the pandemic.

Despite the ongoing weakness in farmer sentiment, farmers continue to be relatively optimistic about farmland values.

“Strong cash flows from crops in 2021, low interest rates and, possibly, rising concerns about inflation continue to propel farmland values higher,” the report states.

The Purdue University/CME Group Ag Economy Barometer is a nationwide measure of the health of the U.S. agricultural economy. The full report is available at purdue.ag/agbarometer.