Farmer sentiment improved slightly in April as the Purdue University/CME Group Ag economic barometer rose six points to a reading of 123. The Future Expectations Index rose seven points to 120.
The Ag Economy Barometer is calculated each month from the responses of 400 US agricultural producers to a telephone survey. This month’s survey was conducted between April 10th and 14th.
“Growers had a more optimistic view of the agricultural economy in April,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “A shift in farmers’ expectations regarding future Fed interest rate policy could be a key reason.”
The Farm Financial Performance Index also improved seven points this month to 93. The US commercial bank interest rate rose to 8% at the end of March from 7.75% in January, and since the Barometer survey in February there has been a noticeable shift in the Farmers’ interest rate expectations. In April, 34% of respondents said they expect US interest rates to remain unchanged or fall over the next year, compared with 25% of producers who thought so in February. At the same time, two-thirds (66%) of producers expect interest rates to continue rising, compared with 75% of respondents who thought so in February. The biggest shift, however, was a drop in the percentage of respondents expecting interest rates to rise between 1% and 2% next year, down six points to 37% since February.
The Farm Capital Investment Index rose one point to 43 in April; Still, more than 70% of respondents still think now is a bad time to make big investments. This month, 39% of respondents cited “rising equipment and construction costs,” while 33% cited “rising interest rates” as the top reason why now is a bad time to make such investments.
Producer expectations for near-term farmland values rose in April after five straight months of decline. The Short-Term Farmland Value Expectations Index rose 10 points to 123 in April, while the Long-Term Farmland Index remained stable at 142. Even with this month’s surge, the short-term index remains 21 points lower than a year earlier and 36 points lower than two years ago.
Discussions on farm legislation are heating up and this month’s survey included questions to learn more about growers’ views of the legislation. When asked about the likelihood that a new farm law will be passed this year, 12% of respondents think it is very likely, 28% somewhat likely, 16% somewhat unlikely and 13% very unlikely. The survey also asked corn and soybean producers what they believe to be the most important aspect of a new farm bill. Of these respondents, 40% chose crop insurance, 31% commodity programs, 13% conservation, 8% agricultural research and extension, and 8% renewable energy as their top priority.
Farmland leasing for solar power generation continues to be a hot topic. In this month’s survey, 15% of respondents said they had been actively in discussions with companies about leasing farmland for solar power generation in the past six months. Of these producers, nearly half indicated that lease rates of $1,000 or more per acre were being discussed. 25% of respondents said they were offered a lease rate of $1,250 or more per acre after development and construction, while 22% of respondents said they were offered between $1,000 and $1,250 per acre. At the other end of the spectrum, 32% of respondents said they had been offered lease rates of less than $500 per acre.
Comments are closed.