Producers surveyed say it’s not a good time to make large investments on their farms
Three-fourths of farmers surveyed in the latest Purdue University/CME Group Ag Economy Barometer say it’s a bad time to make large investments in their operations.
Jim Mintert is the survey’s principal investigator and director of Purdue’s Center for Commercial Agriculture.
“The Farm Capital Investment Index is picking up the idea that it’s not a good time to make investments because producers can’t get a good deal,” he says. “…When you follow up and ask them why is it not a good time? They’re focusing really on two things. One is the increase in prices for farm machinery and new construction. That was chosen, I think by 35 percent of the people in the survey. And then here in recent months, rising interest rates have become more important. This month, that was chosen by roughly a third of the people in the survey.”
Survey respondents said other factors include uncertainty about farm profitability and tight farm machinery inventories at dealers.
The Farm Capital Investment Index fell six points to 37, the lowest reading since last November. For reference, Mintert says, the index was 35 last year and 65 in 2021.
He tells Brownfield that doesn’t mean producers are unwilling to make investments.
“One of the questions that always gets posed to me is, well, if people think it’s a bad time to make large investments why do farm machinery sales remain strong. I think it does come back to this idea that we can’t get a good deal that makes it not a good time, but that’s not the same as saying we won’t make an investment. I think that probably explains a lot of why pharmaceutical sales continue to be pretty strong both in the new and the used market. Having said that, you look ahead to 2024, our data would at least point to the risk that that could start to change, particularly if the economic environment tightens as people are concerned that it might.”
The Ag Economy Barometer is a monthly national survey of 400 U.S. agricultural producers.