Barometer: Farmers Reluctant to Build

The Ag Economy Barometer declined 20 points in May to 158—the lowest barometer reading since September 2020.

Both the Index of Current Conditions and the Index of Future Expectations declined in this latest survey. The index that assesses farmers’ perspectives on current conditions fell by 17 points since April to 178. The index that assesses the mood related to expectations for the future dropped 20 points from April to 149.

The sentiment indices are based upon responses from 400 U.S. producers. Researchers called farmers from May 10 to 14 to collect the data.

The Farm Capital Investment Index, which examines farmers’ willingness to buy equipment and otherwise invest in capital, declined by 10 points from April to 65. Since peaking in December and January at 93, the investment index has trickled downward, although it remains 30 points above May 2020.

When asked more specifically about their plans for farm machinery purchases, the percentage of farmers who planned to increase their purchases in the next year remained constant from April to May. A portion of respondents though who in April said they expect to keep purchases “about the same” drifted into the category of farmers who said they expect to reduce equipment purchases in the next year.

The dip in the Capital Investment Index for May is weighted by producers’ reluctance to invest in construction, which took a harder hit than their willingness to invest in equipment. Fifty-nine percent of respondents said their construction plans for the upcoming year are lower compared to a year ago and just 28 percent of producers said their construction plans were about the same as a year ago.