Farm Capital Investment index falls in latest report
An ag economist says most farmers surveyed in the latest Purdue University/CME Group Ag Economy Barometer still think it’s a bad time to make large investments on the farm.
Jim Mintert with Purdue’s Center for Commercial Agriculture says the Farm Capital Investment Index fell to 35 in January, down 8 points from December and 58 points below its all-time high in January 2021.“They continue to point to two things,” he says. “One is the increased prices for farm machinery and new construction that’s taken place over the years, and the second one is rising interest rates.”
However, he says fewer producers say they are holding back because of interest rate concerns. “That’s consistent with this idea that maybe Fed policy has tightened enough and we’re not going to see any further increases,” he says. “And, of course, the stock market has been discussing whether or not we might see some decreases in interest rates of as we progress through 2024.”
Mintert says there are some farmers who think now is a good time to make larger investments in their operations. But, he says, their reasoning has changed. “Back in July and August, a little over 40% of the folks said it was because they had strong cash flows,” he says. “The percentage of people saying they’ve got strong cash flows has been declining. And then this month it was down to 32%. That’s about the same as last month when it was at 30%.”
He says a rising number of respondents pointed to opportunities to expand the farm made a good time to make large investments, while fewer farmers said it was the increase in dealers’ farm machinery inventories.
The Purdue University/CME Group Ag Economy Barometer is a nationwide measure of the health of the U.S. agricultural economy and surveys 400 agricultural producers on economic sentiment each month.