Rising farm machinery and new construction costs impact farmer sentiment
More than seven out of 10 farmers surveyed in the latest Ag Economy Barometer say it’s a bad time to make large investments in their operations.
Jim Mintert, director of the Purdue University Center for Commercial Agriculture, says it’s important to understand why producers are saying it’s not a good time.
“Overwhelmingly the top choice when we follow-up and ask people about that is the dramatic increase in prices that have taken place for farm machinery and new construction,” he says. “This month that was chosen by 39 percent of the people in the survey who said it’s a bad time to make large investments.”
The Farm Capital Investment Index rose two points to 42. According to the survey, January’s modest rise pushed the index up 35 percent compared to its November 2022 low, although the index remained seven percent lower than a year earlier.
He tells Brownfield rising interest rates are another factor.
“The rise in interest rates is getting the attention of producers and my guess is that we’ll see that percentage rise as we head into 2023,” he says.
25 percent of farmers surveyed said interest rates and 12 percent said uncertainty about farm profitability were the primary reasons it’s a bad time to make largest investments.
The Purdue University/CME Group is a monthly national survey of 400 U.S. Producers.