Farmer Sentiment Sees Modest Improvement
The February Ag Economy Barometer reading reached 111, marking a 5-point rise from last month. The small uptick is attributed to producers expressing increased optimism about the future. However, expectations for their farms’ financial performance in the upcoming year did not improve as the Farm Financial Performance Index remained 13 points lower than in December.
When asked about their biggest concerns for their farm operation in the upcoming year, producers in this month’s survey continued to point to “high input costs” (34% of respondents) and “lower crop/livestock prices” (28% of respondents) as their top two concerns. Interest rate worries among agricultural producers might have peaked as just 18% of February respondents cited “rising interest rates” as a top concern, down from 26% as recently as last November.
Each year in February the barometer survey queries respondents regarding plans for their farm with a question focused on their farm operation’s growth plans for the upcoming 5-year period. This year nearly 4 out of 10 (38%) producers said they have “no plans to grow” and an additional 14% of respondents said they plan to “exit or retire from farming”. On the other hand, just over 3 out of 10 respondents in this month’s barometer survey said they expect their farm’s annual growth rate to exceed 5%. To help put growth rates in perspective, consider that a farm operation growing at a 5% annual rate will double in size in about 14 years whereas a farm growing at a 10% annual rate will need just 7 years to double in size.
Interest in leasing farmland for solar energy development continues to be strong. The February survey queried producers regarding whether they have discussed the installation of a solar energy project with a company in the last six months. If a respondent indicated they had been involved in discussing a possible solar lease, a follow-up question asked, following the construction of the solar project, what annual payment rate per acre was offered. Ten percent of respondents this month said they had discussed a solar leasing project with a company in the last 6 months. Payment rates offered varied widely, but it was notable that over half of respondents said they were offered a lease rate of $1,000 per acre or more.
Wrapping Up
Producers expressed a bit more optimism about the future in the February survey than in January, which pushed the Ag Economy Barometer up slightly. However, expectations for their farms’ financial performance in the upcoming year did not improve as the Farm Financial Performance Index remained 13 points lower than in December. Finally, producers who have engaged in discussions with companies about solar leasing their farmland indicate that per acre payment rates following construction have been rising with over half of them indicating they were offered a rate of $1,000 or more per acre.
Source: Ag.Purude.edu