The barometer of the agricultural economy drops, producers worry about the impact of the war on the prices of inputs

April 5, 2022

The barometer of the agricultural economy drops, producers worry about the impact of the war on the prices of inputs

The barometer of the agricultural economy is falling, producers are worried about the impact of the war on the prices of inputs. (Purdue/CME Group Ag Economy Barometer/James Mintert).
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WEST LAFAYETTE, Ind. and CHICAGO – The Purdue University/CME Group Agricultural Economics Barometer fell to a reading of 113 in March, down 12 points from February and 36% lower than March 2021, marking the weakest farmer sentiment reading since May 2020, the early days of the pandemic. The decline was driven by producers’ lower perceptions of both current conditions in the farm economy and expectations for the future. The current conditions index was down 19 points to 113, down 44% from March 2021, and the future expectations index was down 9 points to 113, down 31% from the same period last year. The Ag Economy Barometer is calculated monthly from the responses of 400 US agricultural producers to a telephone survey. This month’s survey was conducted March 14-18.

“Concern about the impact of the war on input prices and the availability of inputs on their farming operations was paramount in the minds of growers responding to the March survey and was a major factor in the decline of sentiment this month,” said James Mintert, the barometer’s lead investigator and director of Purdue University’s Center for Business Agriculture.

The March survey provided the first opportunity to ask producers how they expect the war in Ukraine to affect US agriculture. Producers overwhelmingly said they expect input prices to be the most affected (63% of respondents), followed by crop prices (33% of respondents) and livestock prices (3% of respondents). In response to a related question, 19% of respondents chose “input availability” as their biggest concern on their farm this year, which was equal to the percentage of producers who chose “lower crop prices and /or livestock” as their biggest concern. .

Digging deeper into grower expectations for farm input prices over the coming year, 57% expect farm input prices to increase by 20% or more, and 36% believe that farm input prices will increase by 30% or more. And, just over a quarter (27%) of producers say they have had difficulty purchasing agricultural inputs for the 2022 agricultural season. Producers report that supply chain issues persist for a wide range of inputs, herbicides, fertilizers and agricultural machinery parts causing the most problems.

Producers continue to say they expect their farm’s financial performance to decline in 2022 compared to 2021. The March Farm Financial Performance Index, which asks producers if they expect whether their farm’s financial performance in 2022 is better, worse or about the same as in 2021, is up slightly (4 points) to 87 but still 30% lower than a year earlier.

“As producers reflect on their farm’s financial situation in 2022, it’s clear that they don’t expect strong commodity prices to offset the dramatic rise in farm production costs they are experiencing. Mintert said.

Producers feel that now is not the right time to invest heavily in their farms, as the farm capital investment index fell again in March. The index was 6 points lower than a month earlier and 59% lower than in March 2021, when it was close to its all-time high. In a pair of follow-up questions, 62% of respondents said their plans to purchase agricultural machinery in the coming year were lower than in the previous year, which is the most negative response to this question since May 2020. When asked a similar question about their construction plans for farm buildings and grain silos, 68% of respondents chose “lower”, which was the most negative response received to this question. question since it was first included in a barometric survey in May 2021.

Supply chain issues continue to haunt the agricultural machinery and construction sectors and are one of the reasons why producers do not see this time as a good time for big investments. For example, 42% of producers this month said their machinery purchase plans had been impacted by low agricultural machinery inventories, consistent with industry reports that major machinery manufacturers are experiencing order books.

Read the full Agricultural Economics Barometer report. The site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly email updates and Barometer webinars.

Each month, the Purdue Center for Commercial Agriculture offers a short video analysis of the barometer results. For even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer, plus a discussion of recent agricultural news that affects farmers.

The Agricultural Economics Barometer, Current Conditions Index and Future Expectations Index are available on the Bloomberg Terminal under the following trading symbols: AGECBARO, AGECCURC and AGECFTEX.

About Purdue University Center for Commercial Agriculture

the Commercial Agriculture Center was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University’s Department of Agricultural Economics, the center’s faculty and staff develop and execute research and teaching programs that meet the diverse needs of management in today’s business environment.

About CME Group

As the world’s leading and most diversified derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and over-the-counter markets, optimize portfolios and analyze data, enabling market participants around the world to effectively manage risk and seize opportunities. . CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest rates, equity indices, currencies, energy, agricultural commodities and metals . The Company offers futures contracts and options on futures contracts through the CME Globex® platform, fixed income trading via BrokerTec and currency trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services that underpin the entire life cycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and transactions through Traiana.

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Writer: Kami Goodwin, 765-494-6999, [email protected]

Source: James Mintert, 765-494-7004, [email protected]

Media contacts:

Aissa Good, Purdue University, 765-496-3884, [email protected]

Dana Schmidt, CME Group, 312-872-5443, [email protected]

Related websites:

Purdue University Center for Commercial Agriculture: http://purdue.edu/commercialag

CME Group: http://www.cmegroup.com/

Agricultural communications: (765) 494-8415;

Maureen Manier, Head of Department, [email protected]

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