Ag Economy Barometer: Farmers more optimistic about ag economy in October

WEST LAFAYETTE, Ind. — There was a modest improvement in farmer sentiment about the ag economy in October as farmers reported improvements in current conditions and future expectations on their farm.

“Farmers’ more optimistic view of their farms’ financial situation was reflected in the Farm Financial Performance Index, which rose six points in October compared to September,” said the Purdue University-CME Group Ag Economy Barometer report.

“This month’s index value of 92 was the highest farm financial performance reading since April and pushed the index 7% above its reading from a year ago. The index’s rise stood in contrast to USDA’s’ forecast for 2023 net farm income to fall below 2022′s income level.”

Farmers continue to be cautiously optimistic about farmland values. Thirty-five percent of farmers said they expect farmland values to rise in their area in the upcoming year, while nearly two-thirds, or 65%, of survey respondents expect farmland values to rise over the next five years.

“Key reasons cited by producers for optimism about farmland values over the next five years continue to be non-farm investor demand, followed by inflation,” the report said.

Nearly one in four corn and soybean farmers reported making changes on their farm in response to long-term weather pattern changes in their area.

Some ways farmers are adapting to weather pattern changes include:

• Increasing use of no-till.

• Changing the mix of crops planted.

• Planting more drought-resistant varieties.

• Installing tile drainage.

• Installing irrigation.

The Farm Capital Investment Index fell four points in October to a reading of 35. This was the lowest reading of the year for the investment index.

“In October, nearly eight out of 10 (78%) respondents said it was a bad time to make large investments in their farm operation, while just 13% of farmers said it was a good time to make large investments,” the report said.

“Among those who said it’s a bad time to invest, the most commonly cited reason was rising interest rates, chosen by 41% of respondents, up one point from September.”

Read the complete report at https://tinyurl.com/4rnfm76z.