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Rising Expenses Cause Ag Economy Barometer Dip

Producer confidence matches the lows seen at the start of the COVID-19 lockdowns

Steven Kilger 2 Headshot
Analogicus | PIXABAY
Analogicus | PIXABAY

The May Ag Economy Barometer level from Purdue University/CME Group fell 22 points from April.

The barometer is now sitting at just 99, the lowest since April 2020, when COVID-19 lockdowns were in place across the country.

Confidence plummets

This is only the second time the Barometer has fallen below 100 since October 2016. Commodity prices are high, and world events seem like they will keep those prices high for the near future.

So, what has producers so worried about?

“Despite strong commodity prices, this month’s weakness in producers’ sentiment appears to be driven by the rapid rise in production costs and uncertainty about where input prices are headed,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

“That combination is leaving producers very concerned about their farms’ financial performance.”

Ripples across other agribusinesses

The lack of farmer confidence has a ripple effect across other agribusinesses.

Only 13% of respondents said this is a good time to make large investments in their operation, while 78% said they viewed it as a bad time to invest.

Even those willing to invest in machinery say their purchase plans were affected by the low inventory levels caused by supply chain issues.

Read the full Ag Economy Barometer report for more information or watch a short video analysis of the barometer results.

Check out the Purdue Commercial AgCast podcast for an in-depth breakdown of the survey results.

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