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Nearly 75% of farmers surveyed say it’s a bad time for large investments

Nearly 75 percent of farmers surveyed in the latest Ag Economy Barometer say now is not a good time to make large farm investments.

Jim Mintert is the director of the Purdue University Center for Commercial Agriculture.

“That Farm Capital Investment Index is capturing the idea that producers don’t think this is a great time to make investments because it’s so expensive. When we did the follow-up question for farmers who said it’s a bad time to make investments, we asked them what their top reasons are and they’re telling us it’s the increase in prices for farm machinery and new construction that’s causing them to say that,” he says.

The Farm Capital Investment Index rose 9 points to a reading of 40. Despite the improvement, the index is still below one- and two-year ago levels. Mintert says the index was 49 at the beginning of 2022 and 90 in 2021.

More than 40 percent of farmers surveyed cited the higher prices and nearly 30 percent said rising interest rates are another reason it’s a bad time to make large investments.

But, Mintert tells Brownfield there has been a shift in producer plans for machinery purchases in the upcoming year.

“In the spring of 2022, 62 percent of the people in the survey said their plans for farm machinery purchases in the upcoming year compared to the prior year were lower. That fell back to 49 percent in the latest survey. That’s still a lot of people that say they’re going to cut back, but still it’s a change with respect to plans relative to what people were telling us last spring,” he says. “When you look at it that way you can see that there’s been a little bit of a change in sentiment and people are a little more willing to make some investments even though they’re still concerned they can’t get a good deal. We continue to hear stories that if you want new equipment, there are still some issues of when you can get it. Some people will have to wait until the end of 2023 or early 2024 for delivery. Also, machinery prices at farm auctions continue to be setting records for the age and condition of the machinery. So, there is a shortage of good deals out there, but that doesn’t mean people aren’t willing to step out and make some of those purchases.”

The Purdue University/CME Group Ag Economy Barometer is a monthly national survey of 400 U.S. ag producers.

Audio: Jim Mintert