US farmer sentiment drops in June
CHICAGO, ILLINOIS, USA – American farm producers were less optimistic about the current conditions of their farming operations and expectations for the future, lowering the Purdue University / CME Group farm economy barometer from 21 to 137 in June.
The Agricultural Economy Barometer is calculated monthly from the responses of 400 American agricultural producers to a telephone survey. This month’s survey was conducted from June 21 to 25.
The current conditions index also fell in June. It fell 29 points to 149 and the Future Expectations Index fell 17 points to 132.
“Farmers expect their input costs to increase much faster in the coming year than in the past decade, contributing to their concerns about their farm finances and financial future.” said James Mintert, principal investigator of the Barometer and director of the Purdue University Center. for commercial agriculture.
The farm financial performance index has declined since its peak in April. It is based on a question that asks producers about expectations for their farm’s financial performance this year compared to last year, down 30 points this month and 42 points since April, to 96.
The lack of optimism in the financial performance of farms appears to be a continuing trend, as the agricultural capital investment index, which fell 11 points to 54, the lowest investment index since May 2020. The decline in investment is linked to producers waiting to build. new building and grain silos.
“In June, 61% of producers said they had reduced their plans for new construction, while 9% said they had increased their plans,” the survey said. By comparison, 44% of producers said they plan to reduce their purchases of machinery, 45% plan to keep purchases constant and 10% plan to increase their purchases, all from a year ago. “
Rising production costs for consumers and inflation in farm input prices is a concern for producers, 30% expect farm input prices to increase by 8% or more over the course of the year. coming year, which would be more than four times the average increase over the past 10 years of just 1.8%.
However, 21% of producers predict that the prices paid for inputs will increase by less than 2%, which would be more in line with recent history.
Labor issues were also attributed to lack of optimism from producers, as the survey found that farms that normally hire non-family labor reported more difficulty in hiring non-family labor. workforce in 2021 compared to 2020. Just over half, 54% in 2020, 51% in 2021, of those surveyed said they had hired people from outside their family.
In June 2021, 66% of those polled said they had had “a few” or “a lot of difficulty” in hiring an adequate workforce, compared to just three in 10 respondents in 2020.
Despite the drop in sentiment among US producers in June, they remained bullish on farmland values. The Short-Term Farmland Expectation Value Index, based on 12-month producer expectations for farmland value, fell nine points to 148, the third highest value in the index since the start of data collection in 2015.
Similar to short-term farmland value, the index of long-term farmland value expectations, based on producers’ five-year outlook, also declined. It fell three points overall to a reading of 155, which was also the third highest reading on record for this index.
The survey received a mixed response from corn and soybean growers on cash rental rate expectations in 2022. In May, nearly two-thirds of growers said they expected a rate hike in 2022. compared to 2021; however, in June, 47% of corn-soybean producers said they expected rental rates to increase in the coming year.
Interest in leasing farmland for solar power projects has increased in recent years. According to the survey, 32% of farms in the June survey said they were aware of solar rental opportunities for their farmland and of those that were aware of rental opportunities, 29% of they said they had entered into discussions with companies about leasing some of their farmland. .
A total of 2.6% of those surveyed said they signed a solar lease on some of their farmland, which the report found is roughly double the percentage of producers who said they signed a carbon sequestration contract during the year. barometric surveys carried out last winter and spring. .