Indiana’s agriculture sector is feeling less optimistic about its outlook, causing many producers to rethink plans to invest in operations.
The Purdue University/CME Group Ag Economy Barometer fell 21 points in June from its May mark of 158 to 137. It is the second consecutive month the index declined.
Producers were less optimistic about current conditions on their farming operations as well as expectations for the future. The Index of current conditions dropped 29 points to 149 and the index of future expectations fell 17 points to 132.
The Ag Economy Barometer is calculated monthly from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between June 21 and June 25.
Purdue researchers said since peaking in April, producers’ view of their farms’ financial performance has fallen sharply. The farm financial performance index, which is based on a question that asks producers about expectations for their farm’s financial performance this year compared to last year, declined 30 points in June, and 42 points since April, to a reading of 96.
Weakening perceptions of farm financial performance spilled over into the farm capital investment Index, which declined 11 points to a reading of 54, the lowest investment index reading since May 2020. The decline in the investment index appears to be driven more by plans to hold back on constructing new farm buildings and grain bins than purchasing farm machinery, researchers said.
In June, 61% of producers said they reduced plans for new construction, while 9% said they increased plans. In comparison, 44% of producers indicated they plan to reduce their machinery purchases, 45% plan to hold purchases constant, and 10% plan to increase purchases, all compared to a year ago.
Rising production costs related to both consumer and farm input price inflation are a concern for agricultural producers. Nearly 30% of producers said they expect farm input prices to rise by 8% or more in the coming year, which would be more than four times the average rise over the last 10 years of just 1.8%.