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Survey: it’s not a good time to make large on-farm investments

Now is not a good time to make large investments, according to many farmers surveyed in the latest Purdue University/CME Group Ag Economy Barometer.

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

“People are telling us it’s a bad time to make large investments because you cannot get a good deal,” he says.

The Farm Capital Investment Index dropped back to its record low of 31 in November. The 7-point decline pushes the reading back to its September level, after a modest rise in the index in October.

He tells Brownfield, “the number one reason chosen for saying that overwhelmingly is the increase in prices for farm machinery and new construction. In the five months that we’ve asked that question, every single month more than 40 percent of the people in the survey that think it’s a bad time have chosen increases in prices for farm machinery and new construction as their number one reason. This month, it was chosen by 47 percent of the farmers surveyed.”

But, that doesn’t mean farmers are unwilling to make investments.

“If I need a tractor, if I need a combine, if I need an implement or planter, people are still willing to make purchases and I think that’s consistent with what the farm machinery companies are telling us as well,” he says. “Those order books are still pretty full.”

Mintert says it will be interesting to see if that changes over the next two years.

“It will be interesting to see how that shakes out as we go across 2023. If the margins really do tighten up as we expect—how people might respond to that a year from now or perhaps in early 2024 as well,” he says.

The Ag Economy Barometer is a monthly national survey of 400 U.S. agricultural producers. Ten percent of respondents said now is a good time to make large investments, while nearly 80 percent said it was a bad time.