In June, the Purdue University/CME Group Ag Economy Barometer continued on a downward slide — down two points to a reading of 97. The Index of Future Expectations fell 5 points to a reading of 96. Researchers note that this is the lowest level for the index since October 2016. However, the Barometer notes that producers are becoming more optimistic about current conditions — the Index of Current Conditions improved 5 points to a reading of 99.
“Rising input costs and uncertainty about the future continue to weigh on farmer sentiment,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, in the release. “Many producers remain concerned about the ongoing escalation in production costs as well as commodity price volatility, which could lead to a production cost/income squeeze in 2023.”
According to the USDA’s NASS report on Agricultural Prices, May agricultural prices were up .5% from April and 27% from May 2021.
When asked about expectations for the farm financial condition in June 2023 compared to June 2022, the Barometer reports that 51% of survey respondents said they expect their farms to be worse off financially a year from now.
“This is the most negative response received to this question since data collection began in 2015,” the report says.
The top concerns for producers in the upcoming year continues to be input prices, followed by input availability, government policies and lower output prices.
“Looking ahead to 2023, a majority of farmers expect to see another round of large input cost increases, with 63% of producers expecting higher costs in 2023, on top of the large increases experienced in 2022,” the report says. “Nearly four out of 10 farmers expect input prices to rise by 10% or more next year when compared to 2022; only one out of 10 producers expect input prices in 2023 to fall below 2022’s prices. Producers also expect inflation to push up the cost of living for farm families in the year ahead. Seven out of 10 survey respondents said they expect the rate of inflation for consumer items to be 6% or higher over the next year, and 35% of respondents said they expect the inflation rate to exceed 10%.”
Make sure to read the full report.
