The August Purdue University/CME Group Ag Economy Barometer dropped 13 points from July to a reading of 100.
That level is the lowest since fall 2015 to winter 2016 during the early stages of a significant downturn in the U.S. farm economy, according to a news release.
The Index of Current Conditions also dropped 17 points to 83, while the Index of Future Expectations decreased by 11 points to 108. Weakening farm income prospects weighed on farmers’ sentiment as the outlook for a bountiful fall harvest was more than offset by declining crop prices, the release said. This month’s survey was conducted from Aug. 12-16, the release said.
“Weakness in the barometer and related indices provide a signal that farmers are concerned about the possibility of extended weakness in farm incomes, similar to what took place from 2015 to 2019,” James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, said in the release.
August’s survey results indicate a shift among farmers’ primary concerns, with 30% of respondents identifying lower commodity prices as their primary concern, compared to 33% who cited high input costs. Last year at this time only 20% pointed to weak commodity prices as a top concern.
However, concerns about rising interest rates have lessened, with only 17% of farmers mentioning this issue, down from 24% last year. Looking ahead, 68% of respondents expect interest rates to decrease in the coming year, while just 19% anticipate an increase, the release said.
The Farm Financial Performance Index dropped 9 points from July’s survey and 14 points from a year ago, reaching its lowest level since July 2020, when there was widespread uncertainty from COVID-related lockdowns. The decline in financial performance reflects ongoing concerns about weak financial conditions, the release said. In turn, weakening financial conditions led many farmers to say that now is not a good time to invest, resulting in the Farm Capital Investment Index falling 7 points to 31, matching its all-time low.
“Farmers have also become less optimistic about farmland values this summer than in recent years,” Mintert said. “The percentage of farmers who think farmland values could decline within the upcoming year has been rising, which is consistent with the weak outlook for financial conditions. The weak capital investment index reading suggests farmers are going to pull back on capital expenditures.”
