Skip to Main Content

Farmer sentiment plummets as production costs skyrocket

Ag Barometer Outlook Farmer sentiment plummets as production costs skyrocket. (Purdue/CME Group Ag Economy Barometer/James Mintert).

The Purdue University/CME Group Ag Economy Barometer dropped to its lowest level since April 2020, down 22 points in May to a reading of 99. Agricultural producers’ perceptions regarding current conditions on their farms, as well as their future expectations, both weakened this month. The Index of Current Conditions dipped 26 points to a reading of 94, and the Index of Future Expectations fell 21 points to a reading of 101. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted May 16-20.

“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.”

The Farm Financial Performance Index declined 14 points to a reading of 81 in May. The percentage of producers who expect their farm’s financial performance to worsen in 2022 compared to last year rose from 29% in April to 38% in May. Over the course of the last 13 months, the Farm Financial Performance Index has fallen 41% below its life-of-survey high of 138 set in April 2021.

The Farm Capital Investment Index drifted to an all-time low in May and is down 30 points from this same time last year. In the May survey, 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 in things like machinery and buildings. Half of the producers in this month’s survey said their machinery purchase plans were impacted by low farm machinery inventory levels, up from 41% in the April survey, suggesting that supply chain issues are at least partly responsible for the ongoing weakness in the capital investment index.

Higher input costs remain a top concern for producers with 44% of those surveyed choosing it as the biggest concern facing their farming operation in the coming year. Additionally, 57% of producers said they expect a 30% or more rise in prices paid for farm inputs in 2022 compared with prices paid last year. The May survey also asked producers about their expectations for input costs in 2023 compared to 2022 with nearly 39% of producers indicating they expect an additional cost increase of 10% or more in the coming year.

In response to a Biden administration policy proposal for a $10/acre wheat/double-crop soybean crop insurance subsidy, this month’s survey asked respondents if the subsidy would encourage them to plant more wheat in fall 2022 than would otherwise be the case. Among producers who have employed a wheat/double-crop soybean rotation in the past, just over one in five (22%) said it would encourage them to plant more wheat. Among producers who have not followed a wheat/double-crop soybean rotation in the past, just one out of 10 producers said the insurance subsidy would encourage them to plant more wheat this fall.

Lastly, farmers remain optimistic toward farmland values. The Short-Term Farmland Value Expectations Index, based upon producers’ 12-month outlook, rose 1 point to a reading of 145. Meanwhile, the Long-Term Farmland Value Expectations Index, based upon producers’ farmland outlook over the upcoming five years, rose 8 points in May to a reading of 149. In a follow-up question, respondents who expect farmland values to rise over the next five years were asked the main reason they expect values to rise. Over the past few months that this question has been posed, respondents have consistently chosen nonfarm investor demand as the top reason, followed closely by inflation.

Read the full Ag Economy Barometer report at https://purdue.ag/agbarometerThe site also offers additional resources – such as past reports, charts and survey methodology – and a form to sign up for monthly barometer email updates and webinars.

Each month, the Purdue Center for Commercial Agriculture provides a short video analysis of the barometer results. For even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer, in addition to a discussion of recent agricultural news that affects farmers.

The Ag Economy Barometer, Index of Current Conditions and Index of Future Expectations are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.

About the Purdue University Center for Commercial Agriculture

The Center for Commercial Agriculture was founded in 2011 to provide professional development and educational programs for farmers. Housed within Purdue University’s Department of Agricultural Economics, the center’s faculty and staff develop and execute research and educational programs that address the different needs of managing in today’s business environment.

About CME Group

As the world’s leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) enables clients to trade futures, options, cash and OTC markets, optimize portfolios, and analyze data – empowering market participants worldwide to efficiently manage risk and capture opportunities. CME Group exchanges offer the widest range of global benchmark products across all major asset classes based on interest ratesequity indexesforeign exchangeenergyagricultural products and metals. The company offers futures and options on futures trading through the CME Globex® platform, fixed income trading via BrokerTec and foreign exchange trading on the EBS platform. In addition, it operates one of the world’s leading central counterparty clearing providers, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire lifecycle of a trade, CME Group also offers optimization and reconciliation services through TriOptima, and trade processing services through Traiana.

CME Group, the Globe logo, CME, Chicago Mercantile Exchange, Globex, and E-mini are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of Board of Trade of the City of Chicago, Inc. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. BrokerTec, EBS, TriOptima, and Traiana are trademarks of BrokerTec Europe LTD, EBS Group LTD, TriOptima AB, and Traiana, Inc., respectively. Dow Jones, Dow Jones Industrial Average, S&P 500, and S&P are service and/or trademarks of Dow Jones Trademark Holdings LLC, Standard & Poor’s Financial Services LLC and S&P/Dow Jones Indices LLC, as the case may be, and have been licensed for use by Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners. 

Featured Stories

Professor works in lab at Purdue
Purdue-led fishing expedition nets new pupfish family member in New Mexico

Scientists have identified a new member on the genetic family tree of an endangered pupfish...

Read More
pots of spruce and other native trees sit in the bed of a wooden trailer behind the Grounds Department Truck
Thousands of trees, hundreds of volunteers, five years and one giant leap for the Purdue Arboretum

The clayey Indiana soil, still saturated from the last spring shower, squishes under shovels. The...

Read More
Yellow flowers against a leafy green background
April showers bring May flowers to Jules Janick Horticulture Garden

The sweet smell of hundreds of blossoms draws pollinators and people alike to the Jules Janick...

Read More
Bob Auber presents from a screen titled "A Day in the Life." In the foreground, there are two graduate students watching.
‘Plants to people:’ Bob Auber’s path from the Center for Plant Biology to oncology

On Friday March 22, Bob Auber returned to Room 116 in Whistler Hall to stand behind a podium in...

Read More
Measuring soil in a field
New Indiana Organic Network to engage farmers in statewide soil health census

A Purdue University interdisciplinary team is establishing a network of organic farmers to...

Read More
Bob and Karen Thompson walking side-by-side while smiling at each other and holding hands
Funding endowed chair in agricultural economics reflects couple’s global vision brought home: “Purdue is special in our lives”

Bob and Karen Thompson have operated as a team, both throughout their 55-year marriage and in...

Read More
To Top