News

Producer sentiment on farm operating loans in 2023

More than 20 percent of farmers surveyed expect to have a larger farm operating loan this year compared to 2022, according to the latest Ag Economy Barometer.

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

“Eighty percent of those farmers who expect to have a larger loan say it’s because of higher input costs,” he says.

The 22 percent of respondents expecting to have a larger farm operating loan is down from the 27 percent who expected to have a larger loan last January.

Fewer farmers are attributing the need for a larger loan to unpaid operating debt.

“In 2020, 35 percent of the people who said they have a higher operating loan said it was because they were carrying over unpaid operating debt. In 2021, that percentage dropped to 20 percent, in 2022 that percentage dropped to 13 percent and this year it dropped to 5 percent.”

Mintert tells Brownfield,“what that’s trying to tell us is that the bulk of producers are entering 2023 in a pretty strong financial position. Strong balance sheet, they’ve had good income levels these last couple of years and ostensibly their working capital position is pretty strong as well. Even though we’re looking at tighter margins in 2023, it doesn’t suggest that we’re going to see a lot of stress in the farm sector in 2023. It’s going to be tighter and it’s probably not going to be as profitable for many people as it was in 2022. But, people are entering this in a strong financial position which is good news for the ag sector.”  

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

Audio: Jim Mintert