Ag Economy Barometer drops below April 2020 level

The Ag Economy Barometer, run by Purdue University, West Lafayette, Indiana, and CME Group, Chicago, dropped to its lowest level since April 2020, down 22 points in May 2022 to a reading of 99.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This past survey was conducted May 16-20.

Agricultural producers’ perceptions regarding current conditions on their farms, as well as their future expectations, both weakened this past May. 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.

“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,” says 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 May’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.

Visit Purdue’s website to read the May 2022 Ag Economy Barometer report.

Read more about the Ag Economy Barometer.