Farmers Concerned Over High Interest Rates
Farmer sentiment weakened again in October as the Purdue/CME Group Ag Economy Barometer fell to a reading of 102, down 10 points compared to a month earlier. Results suggest farmer sentiment is on par with that of late 2015 and early 2016 when farm income was sharply lower than it has been in the last two years.
Concerns about their farm’s financial performance was one of the drivers of weakening sentiment among producers. This month’s weaker financials performance reading is a distillation of producers’ concerns about high input costs combined with weaker commodity prices. Challenging shipping conditions throughout the Mississippi River Valley have hampered exports recently. Looking ahead to next year, 40% of producers view high input costs as their top concern followed by 21% who are concerned about rising interest rates.
Although fewer producers this month said they view now as a bad time to make large investments, which helped push the Farm Capital Investment Index higher, the index remains at a weak level with the cost of new machinery and construction a major concern.
Interest rates are also a hot topic as farm policy discussions are underway while Congress prepares for debate on a new Farm Bill in 2023. Crop producers were asked which two farm policies or programs would be most important to their farm in the upcoming five years. The top choice was interest rate policy (36% of respondents) followed by crop insurance program (27% of respondents).
The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a phone survey. Visit Purdue/CME Group Ag Economy Barometer to view the complete survey results.