Farmers are conflicted about the future, a Purdue survey reveals

Indiana – According to research just published by Purdue University, farmers are expressing a little more optimism about the future, but they are still concerned about what lies ahead.

The Purdue University-CME Group Ag Economy Barometer increased by 2 points to 123 in July from June. This ranking, which is 20 points higher than the index in July 2022, was obtained from a telephone survey of 400 farmers conducted between July 10 and 14.
Among the other findings, more farmers reported that their farms were doing financially better this year than the previous. The percentage of respondents who said their farms’ financial performance had improved increased from 14% in May to 17% last month, while the percentage of respondents who said it had decreased during the same time period decreased from 38% to 30%.

Furthermore, 39% of farmers surveyed expressed concern about a slump in the next five years. Comparatively, 41% of people said the same thing in June.

In contrast, more farmers, 31%, think their farms’ financial situations will be worse at this time next year than better, 21%.

The primary source of that apprehension was worries about interest rates.

65% of farmers believed that the prime interest rate would be higher in July 2024, according to a study done in July, which was performed before the Federal Reserve raised the prime interest rate by.25%. Among them, 33% think the rate could rise by 1% to 2%. In February, 76% of farmers said they were concerned about increasing rates; by June, only 57% said the same.

“If the Fed really is serious about bringing down inflation, that 1-to-2% category… could be more reasonable,” said James Mintert, the director of Purdue’s Center for Commercial Agriculture and the principal investigator for the barometer, on a podcast discussing the results.

Due to the rising rates, more farmers are delaying major purchases. In July, 39% of respondents gave borrowing rates as the main justification for the delay, as opposed to 29% who gave greater prices for building and machinery. 37% of respondents in June mentioned greater costs, while 35% expressed anxiety about rising interest rates.

The Farm Capital Investment Index increased in July to 45, up three points from June and 14 points from its low point in last November, which Mintert called “a big move” for the index. This occurred despite worries about borrowing rates.

“Normally, if you expect interest rates to go up, you would think that would create a somewhat unfavorable environment for investment, but our survey isn’t supporting that, at least so far,” Mintert said.