The Farm Capital Investment Index—the measure of farmers’ willingness, in part, to buy equipment—held strong at its record high of 93 for the past two months. The percentage of farmers expecting to increase their machinery purchases also held at its highest level of the last year at 15 percent.

Since its peak in October, the Ag Economy Barometer has fallen 9 percent, all attributable to weaker expectations for the future. The Index of Future Expectations has fallen 19 percent since October, while the Index of Current Conditions rose 12 percent over the same time period.

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 from Jan.18-22.

The survey found that producers are becoming more optimistic about short-term expectations for their farms’ financial performance, with nearly one-third expecting better financial performance in the coming year compared to 2020.

Interest in capturing carbon on farms that agree to follow specified production practices has increased as several firms have begun offering contracts to farmers. Thirty percent of respondents in the January survey said they are aware of opportunities to receive a payment for capturing carbon. Among the 30 percent aware of these opportunities, 22 percent said they have actively engaged in discussions about receiving a carbon capture payment.

This implies that 6 to 7 percent of the farmers who responded have given consideration to contractually sequestering carbon.

The Farm Capital Investment Index, which reflects farmers’ willingness to invest in equipment and other capital, ticked up to 72, which concluded 2019 at the highest investment index value for the year.

Although the overall reading changed little, the survey revealed a shift in producers’ perspective regarding both their farms’ and the production ag sector’s economic health.

Producers expressed less confidence than a month earlier about current economic conditions; the Index of Current Conditions declined by 12 points to 141 from November to December.

In contrast, producers’ expectations for the future remained strong; the Index of Future Expectations rose slightly from 153 in November to 155.

A slim majority (52 percent) of farmers on the December barometer survey indicated that their farm’s financial performance in 2019 matched their initial budget projections.

To better assess the level of financial stress among U.S. farms, researchers asked producers in November and December whether they expected their farm’s operating loan in 2020 to be larger than, about the same, or smaller than in 2019. About one in five farmers expect to have a larger operating loan in 2020. About three in 10 of those operations indicated the reason for the larger operating loan is that they expect to carry over unpaid operating debt from 2019. Responses to these two questions suggest that about 6 percent of farms surveyed in late 2019 were experiencing significant financial stress.

The Purdue University/CME Group Ag Economy Barometer is a nationwide measure of the health of the national agricultural economy. Results are based on responses from a survey of 400 agricultural producers.

Although the barometer’s decline was small, there was a relatively large sentiment shift among ag producers as they were noticeably more pessimistic about current conditions on their farms and in the U.S. ag economy but somewhat more optimistic about future economic conditions, both compared to one month earlier.

The Index of Current Conditions declined from a reading of 122 in August to 100 in September. This was in contrast to the Index of Future Expectations, which rose 6 points compared to August, with a September reading of 131.
The barometer is based on results from a nationwide telephone survey of 400 U.S. crop and livestock producers.

Concerns about current economic conditions on their farms spilled over into producers’ perspective on making large investments in their operations.

The Farm Capital Investment Index, which is based upon a question posed to farmers each month regarding the advisability of making large investments in their farming operations in items such as machinery or buildings, declined to 47.

This was down 9 points compared to August and 20 points below the Farm Capital Investment Index’s highest reading of this calendar year, observed in July when crop prices were near their 2019 peak.