Farmer Sentiment Rises, Financial Outlook Remains Strong

Farmer sentiment improved slightly in August.

The Ag Economy Barometer released Tuesday rose four points from July to a reading of 138.

The sentiment improvement appeared to be driven in part by stronger financial conditions revealed in the Farm Financial Performance Index.
To break it down, the Index of Current Conditions climbed nine points to 152, and the Index of Future Expectations rose two points to 132.

The Farm Financial Performance Index rose 11 points to 110—its highest reading since May. Farmers indicated they expect profitability this year to be better than last year.

The Farm Capital Investment Index, which measures farmers’ willingness to spend, improved by three points to 53 after a four-month decline.

Researchers recently added questions to the monthly survey to clarify farmers’ willingness to invest in construction investment vs. ag equipment.

What they learned is that farmers’ intent to buy machinery was stable from July to August. Cost of materials is having a greater affect on construction plans, hence influencing the downward trend in that category that began this spring.

Producers are becoming increasingly concerned about rising input costs. Thirty-nine percent of respondents said they expect input prices to rise by 8 percent or more, up from 30 percent who felt that way in June and July. Meanwhile, one in five producers expects farm input price inflation to exceed 12 percent.

The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This survey was conducted from Aug. 23-27.

See complete survey results here.