principal investigator and director of Purdue University’s Center for Commercial Agriculture.
And, the report continued, “Te Farm Financial Performance Index dropped to 93 this month, down from 109 in December, but that primarily reflects producers’ being asked to look ahead to 2023 and compare it to 2022 rather than comparing 2022 to 2021, which they did in December. To further gauge producers’ expectations for 2023 compared to 2022, the December survey included a question asking producers to look ahead to 2023. Responses to that question were similar to those received this month helping confirm that, compared to a very strong income in 2022, producers expect to see margins tighten in 2023.”
Ag Economy Barometer Financial Performance Index, April 2018-January 2023.
“Te Farm Capital Investment Index climbed 2 points to 42. January marked the second month in a row the index rose, the first time that’s occurred since autumn of 2020. January’s modest rise pushed the index up 35
percent compared to its November 2022 low, although the index remained seven percent lower than a year earlier. Just over seven of ten survey respondents said they think now is a bad time to make large investments in their farm operation. Among those respondents who felt now was a bad time, 39 percent said it was because of high prices for machinery and new construction, down from 47 percent who pinpointed cost as the primary reason for holding off on investments back in November. Interest rates are becoming a bigger concern for farmers. As compared to November, more respondents in January pointed to rising interest rates (25 percent vs. 19 percent) as their primary reason. Uncertainty about farm profitability also rose as compared to November (12 percent vs. 10 percent).
Ag Economy Barometer Why Is Now a Bad Time to Make Large Investments? July-January 2023.
Te report found that, “Producers’ expectations for short-term and long-term farmland values were mixed in January. Te Short- Term Farmland Index fell four points to 120, down 15 percent when compared to one
year earlier, as more producers said they expect values to hold steady over the coming year instead of increasing. Te Long-Term Farmland Values Index rose slightly to 142 from 140 in December. Over the last year, the long-term index has declined just two percent, as producers continue to retain a more optimistic long-term than short-term view of farmland values. Among producers who expect to see farmland values rise over the next five years, the top reasons for their optimism continue to be non-farm investor demand (63 percent) and inflation (23 percent).”
Ag Economy Barometer Long-Term Farmland Value Expectations Index, January 2018-January 2023.
Each January, starting in 2020, the survey has included a question asking respondents if they expect to have a larger operating loan compared to the previous year and, if so, the reason for the larger loan. In January, 22 percent
of respondents anticipated needing a larger loan, compared to 27 percent in 2022. Among respondents who expect to have a larger operating loan, 80 percent indicated it was due to increased input costs, while only five percent said it was due to carrying over unpaid operating debt. Responding to the same question, when it was first posed in January 2020, slightly over one-third of producers who
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