Farmer sentiment dropped six points as the January Purdue University/CME Group Ag Economy Barometer declined to its second-lowest reading since July 2020.
One of the main drivers of decline was farmers’ thoughts about the 2022 financial performance. The Farm Financial Performance Index fell sharply in January to a reading of 83, a 30% decline compared to a year earlier and 27% lower than in December 2021. The report authors explain farmers expect income to decline sharply in 2022.
The Farm Capital Investment Index also weakened this month, falling four points. In January, 52% of respondents said they plan to reduce their farm machinery purchases in the upcoming year. Farmers also expect input prices to increase. Fifty-seven percent of survey respondents expect farm input prices to rise by 20% or more in 2022 and 34% of producers expect prices to increase by 30% or more.
This month, 27% of respondents expect to have a larger operating loan in 2022 than a year earlier, 10 points higher than last year’s survey and 12 points higher than two years ago.
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