Farmer sentiment drops in February

Higher interest rates and questions about the growth of U.S. agricultural exports are worrying farmers, according to the latest Purdue University/CME Group Ag Economy Barometer.

The barometer of producer sentiment dropped 5 points to a reading of 125 in February, according to a news release.

Farmers’ perspectives regarding both current conditions on their farms and expectations for the future also weakened, according to a news release. The Index of Current Conditions fell 2 points to 134 and the Index of Future Expectations declined 6 points to 121. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted Feb. 13-17, the release said.

"Increased concern over the risk of falling output prices, rising interest rates and uncertainty over the future growth of U.S. agricultural exports is weighing on producers’ minds,” James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture, said in the release.

Producers’ expectations for their farms’ financial performance in 2023 compared to 2022 also weakened, with farmers pointing to concerns about higher input costs (38% of respondents), rising interest rates (24% of respondents) and lower output prices (18% of respondents) as their biggest concern for the year ahead, the release said.

Farmers are less certain about U.S. ag export growth, with just 33% of farmers looking for exports to grow over the next several years. That is down from 70% looking for rising exports in 2020, the release said.

February’s survey found 72% of producers said it is a “bad time” to make large investments in their farming operation, while just 15% reported it is a “good time” to make such investments, the release said.

Of those who said now is a “bad time” to make large investments, 45% of respondents said it was because of an increase in prices for farm machinery and new construction, while 27% of respondents said it was because of “rising interest rates.”

Speaking to land values, the survey found 33% of farmers said they expect land values to rise in the next 12 months, with 14% expecting the land market to weaken.