Farmer Sentiment Plummets as Production Costs Skyrocket

The Purdue University/CME Group Ag Economy Barometer dropped to its lowest level since April 2020, down 22 points in May to a reading of 99. Agricultural producers’ perceptions regarding current conditions on their farms, as well as their future expectations, both weakened this month. 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. The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted May 16-20.

“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,” said 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.