The Purdue University/CME Group Ag Economy Barometer closed out the year on a positive note, rallying 24 points in December to a reading of 126. U.S. farmers were more optimistic about both their current situation and expectations for the future. The Current Conditions Index jumped 37 points to a reading of 135, while the Future Expectations Index increased 18 points to a reading of 122.
The improvement in current sentiment was motivated by producers’ stronger perception of current financial conditions on their farms and could be attributed to producers taking time to estimate their farms’ 2022 income following the completion of the fall harvest. The Farm Financial Performance Index climbed 18 points to a reading of 109 in December. The turnaround was driven by a sharp increase in the percentage of producers who expect better performance than last year, which jumped from 23% to 35% of respondents, and is consistent with USDA’s forecast for strong net farm income in 2022. The Farm Capital Investment Index also climbed 9 points this month to the highest reading for the index since February.
Looking to the year ahead, the December survey asked producers to compare their expectations for their farm’s financial performance in 2023 to 2022. Producers indicated they expect lower financial performance in 2023 and cited rising costs and narrowing margins as key reasons. Concerns about costs continue to be top of mind for producers. Nearly half (47%) of crop producers said they expect farmland cash rental rates in 2023 to rise above the previous year. Other top concerns for 2023 include higher input costs (45% of respondents), rising interest rates (22% of respondents) and lower crop or livestock prices (13% of respondents).
The most recent DTN/The Progressive Farmer Agriculture Confidence Index and the companion DTN/The Progressive Farmer Agribusiness Confidence Index also found farmer optimism continues on a slight upswing.
The latest DTN/The Progressive Farmer survey, conducted in late November and early December, showed a highly optimistic present condition score of 162.1, up significantly from spring.
Findings were also similar to the Purdue survey as the DTN/The Progressive Farmer survey found farmers feel positive about the present, but they are concerned about the future.
EDITOR’S TAKE:
Two different surveys, very similar results. Farmers/ranchers are feeling more optimistic after they finished harvest and reviewed their financial picture with actual data in hand. Of course, they are feeling less optimistic about the coming year since there are a number of uncertainties and unknowns related to input costs. Nevertheless, right now they have money and are in a good mood! Why not take full advantage of that knowledge. It might be a good time to entice them into your service department for an oil change or tune up on their current truck. And, remember to have them stop by the sales department so you can explain that you are a CAD member and only CAD members can offer AgPack®! Make certain these farmers/ranchers understand that by leasing or purchasing a new or qualified used vehicle they are eligible for thousands of dollars in AgPack® exclusive rebates and discounts. In addition, they will be able to take advantage of IRS section 179 depreciation. Win-win for sure!
