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Barometer shows slight improvement to farmer sentiment

The head of Purdue’s Center for Commercial Agriculture says farmer sentiment improved this month primarily due to improved financial expectations.

Jim Mintert tells Brownfield the Index of Current Conditions declined 2 points from February while the Index of Future Expectations increased 5 points for a reading of 114. “One of the big motivations behind that was probably the improved interest rate outlook among producers,” he says. “When we asked producers about their outlook for the US prime rates, almost half, 48% of the people in the survey said they look for the US prime rate to decline over the next 12 months.”

He says agriculture is capital intensive, and a softening of interest rates can significantly improve farmers’ economic outlook. “But that also translated into their view of asset values because we also picked up some strength in the short-term farmland index as well as the farm Capital Investment Index,” he says.

Mintert says higher input costs, lower crop and/or livestock prices, and rising interest rates remain producers’ top concerns. “But, there is a little bit of a shift going on kind of within those categories,” he says. “More people are worried about lower crop and livestock prices. This month it was 26%, a year ago that was at 18%. We’re picking up more people worried about output prices, the prices of crops and livestock.”

Mintert says the Capital Investment Index rose 7 points this month, indicating producers survey think it’s a good time to make large investments on their operations.  The short-run outlook for farmland values also improved for March, climbing 9 points from the February reading.

The Ag Economy Barometer surveys 400 U.S. agricultural producers each month regarding the status of the U.S. farm economy.

AUDIO: Jim Mintert, Purdue University