Farmer sentiment continues to improve at the start of 2023
Producers are a little more optimistic about the future of the ag economy, according to the latest Purdue University/CME Group Ag Economy Barometer.
Jim Mintert is the director of the Purdue Center for Commercial Agriculture.
“The Future Expectations Index did drive the increase in the barometer. It was up five points this month compared to a month ago. It’s up about 13 percent compared to a year ago,” he says.
The overall Ag Economy Barometer Index rose four points to a reading of 130 in January. That’s 34 percent above the barometer’s 2022 low point that occurred last June.
“Over the last two months, there’s been a 28-point rise in the barometer so that’s been a nice little bump,” he says. “(The index) is a little bit higher than last year, I think it’s up about nine percent compared to a year ago but that still leaves the barometer 37 points below where it was two years ago. That’s a decline of about 20-23 percent. There’s been a nice bump in improvement in sentiment these past two months, but we certainly have not recovered all the sentiment that we lost over the last two years.”
But, he says farmers surveyed are less optimistic about their farms’ financial performance in 2023 as they report expectations for tighter margins.
“When you look at the Financial Performance Index, in December we were asking people to compare their farm’s financial performance from 2022 to 2021. In January, we rolled over and said what are your expectations for your farm’s financial performance in 2023 versus 2022. That really accounts for the bulk of that drop that took place. I think we had a 16-point drop in the financial performance index. It wasn’t so much that people changed their view, it was more like we expect tighter margins in 2023 than what we saw the year before. 2022 was a very profitable year especially for corn belt farmers raising corn and soybeans. People don’t expect that to continue into 2023,” he says. “…I think people recognize they’ve got elevated input costs and production costs; prices are softer, and we’re not likely to see the kind of returns that we’ve seen the past two years. That doesn’t mean 2023 is going to be a terrible year or that people expect a terrible year, but they certainly don’t expect a repeat of what they saw in 2022.”
The monthly national survey of 400 U.S. agricultural producers was conducted January 16-20.
Audio: Jim Mintert