Pinched profits are sending farmer sentiment to its second-lowest level since July 2020.
The Purdue University/CME Ag Economy Barometer is a survey of 400 producers, aiming to measure the health of the U.S. ag economy. And January’s report reflects all the bitter pills producers are trying to swallow these days.
Soaring input costs and ongoing supply chain issues are pushing production costs and piling on farmers’ minds. Though the barometer ended 2021 on a high note as producers compared 2021’s positive income year to 2020, things aren’t looking as rosy for 2022.
By the numbers: Producers say inputs are hard to come by and expensive to buy. Of all respondents:
- 28% said they’ve had trouble pinning down 2022 inputs
- 57% expect input prices to rise at least 20% in 2022
- 27% expect to have a larger operating loan than last year
- 52% said they plan to decrease their farm machinery purchases in 2022
- 37% of corn farmers plan to reduce nitrogen application rates
Soundbite: “The pricing really seems to be a little bit out of control. Corn and soybeans aren’t keeping up with the input costs,” said Randy Poll, farmer and Michigan Corn Growers Association president.
Insult to injury: Short-term and long-term farmland indices have also fallen about 10% from their 2021 peaks. Farmland values have continued to increase, and respondents foresee them continuing to climb. They say price increases are fueled by non-farm investor demand and inflation, putting further pressure on producers.