March 29, 2024

Ag Economy Barometer: Farmers more optimistic about ag economy heading into new year

WEST LAFAYETTE, Ind. — Farmers were more optimistic about the agriculture economy in December, according to the Purdue University-CME Group Ag Economy Barometer.

The barometer rose 24 points from November to December. Farmers were most optimistic about changes to current conditions.

“The change in perception among producers regarding their farms’ financial situation could be attributable to producers taking time to estimate their farms’ 2022 income following the completion of the fall harvest,” the report stated.

“This month’s improved assessment of farm financial conditions is consistent with USDA’s forecast for strong net farm income in 2022.”

The majority of farmers continue to agree that now is a bad time for large investments on the farm. Forty-one percent said high prices for farm machinery and new construction are the reason why.

Rising interest rates also concern farmers. Twenty-eight percent of farmers cited rising interest rates as a reason why it’s not a good time to make large purchases.

Most farmers expect a weaker financial performance in 2023, chiefly due to higher costs.

“Rising costs and narrowing margins are key reasons for the lower index in 2023,” the report said. “Concerns about costs continue to be top of mind for producers’ when asked to look ahead to the upcoming year.

“For example, nearly half (47%) of the crop producers in this month’s survey said they expect farmland cash rental rates in 2023 to rise above the prior year.

“And in a related question, 45% of producers cited higher input costs as their top concern in 2023 followed by rising interest rates (22% of respondents) and lower crop or livestock prices (13% of respondents).”

Read the complete report at https://tinyurl.com/ycr5kfff.

Erica Quinlan

Erica Quinlan

Field Editor