Farmers’ rating of financial conditions on their farms was virtually unchanged in July, compared to June, as the Farm Financial Conditions Index rose just one point to 87 vs. a reading of 86 in June. When asked to look ahead one year, there was a one percentage point increase in farmers expecting farm financial conditions to improve in July vs. June and, correspondingly, a one-point decline in the percentage of farmers expecting conditions to worsen. And farmers’ longer-term perspective on the U.S. agricultural economy improved somewhat in July, as the percentage of respondents expecting bad times in the upcoming 5 years fell from 41% in June to 39% in July.

Farmers’ top concern for their farming operations in the upcoming year is still higher input costs, chosen by 37% of respondents in this month’s survey. The number two concern for this month’s survey respondents was rising interest rates, chosen by nearly one out of four (24%) producers followed by lower output prices chosen by 19% of farmers in the survey. Given the volatility in commodity prices, especially crop prices, this spring and early summer it’s notable that more producers expressed concern about rising interest rates than declining output prices.

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“We’re now expanding that capability to all the public soybean breeding programs in the region,” said Rainey, professor of agronomy, who also directs the Purdue Soybean Center. Soon, she and Cherkauer will begin receiving drone imagery collected on a panel of 1,200 soybean varieties that breeders have planted in 11 states across the U.S. north-central region.

“Here at Purdue, we’ll do all the processing and modification of the images to predict biomass,” she said.

The effort is part of the SOYGEN3 (Science Optimized Yield Gains across ENvironments) project. Consisting of eight universities, including Purdue, SOYGEN3 has more than $900,000 in funding from the North Central Soybean Research Program.

“The overarching goal in this experiment is to develop methods and models for selecting soybeans that will be high yielding in future extreme environments under climate-change scenarios,” Rainey said. “We know that the future environments we’re going to grow soybean in are different from the ones we have now because climate is changing.

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Higher input costs are still the number one concern among survey respondents with the shift in U.S. monetary policy rising to the forefront as an issue among U.S. producers. This month 44% of respondents chose “higher input costs” as their number one concern, down from 53% last month. Second on the list of producers’ concerns for the upcoming year was “rising interest rates”, chosen by 23% of respondents, up from 14% in August.

This month’s Farm Financial Performance Index showed that compared to earlier this year, producers clearly feel better about their farm’s financial performance.

The Farm Capital Investment Index declined to a record low of 31 in September as producers continue to indicate that they do not view this as a “good time” to make large investments in their farming operations. Despite that negative perspective, the percentage of producers who plan to reduce their farm machinery purchases declined again this month, down 2 points compared to responses in August. Since peaking in March at 62 percent, the share of producers who plan to reduce their machinery purchases compared to a year earlier has been declining, dipping to 47% this month.

For the third month in a row, producers overwhelmingly said it was primarily because of the increase in prices for farm machinery and new construction. However, interest rates are starting to become a factor influencing producers’ decision making. Throughout the summer the percentage of farmers who chose “rising interest rates” as a primary reason for thinking it’s a bad time to make large investments rose from 14% in August to 21% in September.

Producers are also becoming increasingly worried about the impact of rising interest rates on their farm operations with more of them citing it as a reason why they think now is not a good time to make large investments.

The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. 

See complete survey results

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.