Seven out of every 10 large-scale farmers and ranchers expect high inflation to persist into 2023 and 51 percent anticipate their operations will be worse off financially next summer than they are now, said Purdue University on Tuesday. Its Ag Economy Barometer, a monthly gauge of farmer confidence, fell to its second-lowest level since October 2016.
“Rising costs and uncertainty about the future continue to be a drag on farmer sentiment,” wrote agricultural economists James Mintert and Michael Langemeier, who oversee the monthly survey.
Farmer confidence reached an all-time high of 183 in the fall of 2020, as commodity prices surged with the return of China as a steady customer for U.S. food and ag exports. It has softened ever since and dipped to 97 in the latest survey, the lowest since 96 in April 2020 and 92 in October 2016.
“A majority of farmers expect to see another round of large input cost increases with 63 percent of producers expecting higher costs in 2023 over and above the large increases experienced in 2022,” said Mintert and Langemeier. “Seven out of 10 survey respondents said they expect the rate of inflation for consumer items to be 6 percent or higher over the next year and 35 percent of respondents said they expect the inflation rate to exceed 10 percent.”
Producers held dour views despite sky-high commodity prices that followed Russia’s invasion of Ukraine on Feb. 24 and forecasts that net farm income, a broad measure of profits, will be far above average this year despite record-high production expenses. Analysts have warned the high commodity prices may be short-lived.
In the survey, 64 percent of producers said they expected the price of farm inputs would be at least 20 percent higher this year than in 2021. The top concern for 2023 was “higher input costs,” chosen by 43 percent of respondents. The second-greatest concern, at 21 percent, was “availability of inputs.”
Some 51 percent of participants in the Purdue survey said they expected their farms to be worse off financially a year from now, “the most negative response received to this question since data collection began in 2015.”
One in five crop producers said they intend to change their mix of crops in the upcoming year in response to rising input costs. Some 46 percent of those planning a change, or 9 percent of all growers, said they would devote more land to soybeans, 26 percent said they would plant more wheat and 21 percent said they would grow more corn.
It was the second month in a row that farmers said they would plant more wheat for harvest in 2023. Warfare has reduced exports of wheat from Ukraine and Russia, two of the world’s largest exporters of wheat.
The Ag Economy Barometer is based on a telephone survey of 400 operators with production worth at least $500,000 a year. Producers were contacted from June 13-17. USDA data say the largest 7.4 percent of U.S. farms top $500,000 in annual sales. The barometer has a margin of error of plus or minus 5 percent.
The Ag Economy Barometer is available here.