Agricultural producers have a lot on their minds right now. Planting, volatile markets, rising costs, the war in Ukraine, securing inputs, and drought are all top of mind and all factor into producer sentiment regarding the agricultural economy. Yet with all the aforementioned on mind, producers remain guardedly optimistic.
The Purdue University-CME Group Ag Economy Barometer each month surveys 400 agricultural producers nationwide to gauge their sentiment on economic conditions in agriculture. The latest report by James Mintert and Michael Langemeier of the Purdue Center for Commercial Agriculture showed an overall reading of 121 in April, 8 points higher than March, but off 32 percent from April 2021. The overall index compares producers’ current sentiments to October 2015. Readings above 100 indicate producers are more positive relative to October 2015. Readings below 100 mean they are less positive.
Producers’ sentiments in April improved relative to March for both current economic conditions (12 months into future) and future conditions (5 years into future). The index of current conditions registered 120 and the index of future expectations registered 122. Mintert and Langemeier attribute the modest increase in sentiment to ongoing strength in commodity markets, although rising input costs and concerns over procuring inputs continues to weigh on producers’ minds. Higher input costs were the top concern for 42 percent of the respondents and 60 percent indicated they expect input prices to rise 30 percent over the next year. Also, 34 percent of producers said they had experienced difficulty in securing inputs for this crop season.
Positive, but guarded, might be the best way to capture producer sentiment right now. One would guess the sentiment captures the average citizens view of the overall economy as well. There are reasons to be positive, but valid reasons to be concerned too.
Figure 2. Purdue/CME Group Ag Economy Barometer