Farm financial performance sentiment weakens, but remains relatively high
Farmers are less optimistic about their farms’ financial performance, according to the latest Purdue University/CME Group Ag Economy Barometer
Purdue University’s Jim Mintert says sentiment on farm financial performance is relatively high despite the decline.
“That’s a reflection of strong commodity prices and expectations for strong or very positive income levels here in 2021, but it was a little bit softer than last month,” he says.
He tells Brownfield the farm capital investment index also declined.
“If you look under the hood a little bit and look more specifically at plans for farm machinery purchases, the interesting thing there was the percentage of people that said they plan to increase their purchases stayed constant,” he says. “The change occurred because the percentage of people who said they plan to hold their purchases constant declined and they shifted over into saying they were going to reduce purchases.”
The survey included a new question on producers’ plans to construct new buildings or grain bins.
“We don’t have any history on this question so I can’t make a comparison to the last month or to a year ago, but I was a little surprised that 59 percent of the people in the survey said they plan to reduce their construction of new farm buildings and/or grain bins this year compared to a year ago,” he says. “We’ll monitor that question going forward and it will be interested to see how it plays out, but that was a little more negative than I was expecting when we poised the question.”
The response categories about farm buildings and grain bins were more negative than the farm machinery purchases, suggesting that construction plans are a driver in the index’s recent weakness. The Farm Capital Investment Index fell 10 points to a reading of 65 but remains 30 percent above its May 2020 reading.