U.S. farmer confidence declines in September as inflation fears rise


U.S. farmer confidence declines in September as inflation fears rise

October 19, 2021

The Perdue University Farm Economics Barometer shows weaker sentiment among U.S. farmers for September 2021, recording its lowest reading since July 2020.

Sentiment among agricultural producers weakened in September as the Agricultural economy barometer fell 14 points to 124. This is the lowest reading for farmer sentiment since July 2020, when the index was 118.

Producers were less optimistic about the current and future state of their operations and the agricultural sector than they were a month earlier. The Index of current conditions fell 12 points to 140 this month, while the Future expectations index lost 16 points to 116.

This month’s one Future expectations index the reading was at its lowest since May 2020, when the country was still in the grip of the first stage of the pandemic. The Purdue University-CME Group Ag Economy Barometer Sentiment Index is calculated monthly from the responses of 400 American agricultural producers to a telephone survey. This month’s survey was conducted from September 27-29, 2021.

Figure 1. Purdue / CME Group Agricultural Economy Barometer, October 2015-September 2021.

Figure 2. Indices of current conditions and future expectations, October 2015-September 2021.

The Agricultural financial performance index, with a reading of 110, remained unchanged from the previous month, but there was a change among producers in their responses used to calculate the index. Fewer producers said they expected the financial performance of their operation to be about the same as last year, while the percentage of producers expecting both worse and better returns increased.

The percentage of farms expecting better performance, 36%, was four points higher than last month and the highest since May. The percentage of farms expecting worse financial performance also increased by 4 points to 26%, in line with early summer expectations, but significantly higher than in May, when only 16% of farms reported expect poorer performance this year than last year. The difference in expectations between farms could reflect differences in how individual farms handled risk in a period of rapidly fluctuating commodity prices.

The decline in farmers’ sentiment has resulted in a Agricultural capital investment index. The index lost 10 points to 43, which was the lowest value of the investment index since April 2020. In addition, the investment index is now down more than 50% since the beginning of the year. Farmers’ plans to purchase machinery were a bit weaker than in August, with just 8% of respondents planning to increase their purchases in the coming year, down from 10% last month.

This month’s survey included a new question to capture the impact of supply chain challenges in the agricultural machinery industry on investment plans. Almost half (45%) of respondents said their plans to purchase farm machinery have been affected by low farm machinery inventories, which explains the low sentiment about whether or not the time is right to do so. make significant investments in their farm.

A positive point has been the improvement of farmers’ plans for new construction. New construction plans rose this month, with 13% of respondents expecting to increase construction of grain elevators and farm buildings, compared with 8% expecting such purchases to increase in the survey. ‘August.

Figure 3. Agricultural capital investment index, October 2015-September 2021.

Figure 4. Plans to purchase agricultural machinery in the coming year compared to a year ago, from March 2020 to September 2021.

Figure 5. Construction plans for new farm buildings and grain elevators, May-September 2021.

Concerns about rising input costs rose sharply in September, contributing to weak farmer confidence. This month, just over a third of those polled said they expected agricultural input prices to rise by more than 12% in the coming year, more than 6 times the rate. average inflation of agricultural inputs over the past decade.

In addition, inflation expectations were generally higher this month. The percentage of respondents expecting input inflation to exceed 12% rose from 21% last month to 34% this month, while responses to all lower inflation categories provided in the survey have declined. Notably, the percentage of producers expecting input inflation to exceed 12% has doubled since July.

Figure 6. Agricultural input price forecast for the next 12 months, June-September 2021.

Despite lower readings for both the Indices of current conditions and future expectations, farmers remain optimistic about the value of farmland. Both short and long term Indices of farmland value expectations increased this month. The Long-term farmland value expectations index hit a record 159, 4 points higher than a month earlier, while the short-term index rose 9 points to 155, the third highest since data collection began in 2015.

About half of the corn-soybean producers in our survey continue to say that they expect cash rental rates for farmland to increase in 2022 compared to 2021. Three in ten respondents expect this. as rates increase by 10% or more, while 44% of respondents expect the rental rate to increase to anywhere from 5% to 10%.

Figure 7. Long-term farmland value expectations index, May 2017-September 2021

Farmers’ expectations for the future outlook for agricultural trade continue to weaken. In early 2020, seven in ten producers said they expected agricultural exports to increase over the next five years. Since then, the percentage of farmers expecting an increase in agricultural exports has declined month by month, with few exceptions.

This month’s survey recorded the lowest percentage (37%) of producers expecting an increase in agricultural exports since we first asked the question in early 2020. Concerns about the future of agricultural trade could be one of the reasons for the weak Future expectations index.

Figure 8. Forecast agricultural exports over the next 5 years, January 2020-September 2021.


Farmer confidence weakened in September as agricultural producers reported both weaker current conditions on their farms and lower expectations for the future. Although the Agricultural financial performance index was unchanged this month, there has been a shift in financial expectations with fewer producers expecting performance similar to last year and more producers expecting both better and worse performance than last year. ‘one year earlier.

The weaker sentiment of farmers has spread throughout the Agricultural capital investment index, although more than half of those polled this month said low inventories of farm machinery had impacted their purchasing plans. There has been a sharp increase in farmers’ expectations for farm input price inflation, with more than a third of respondents expecting input prices to increase by more than 12% during the year. future.

Farmers’ optimism about the future growth of agricultural exports continues to weaken, which, combined with concerns about squeezing operating margins, could contribute to weak farmer confidence. Despite the weak sentiment of farmers, farmers remain optimistic about the value of farmland with the Long-term agricultural land value index hitting an all-time high this month.

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