The Ag Economy Barometer slipped to a reading of 116 in November, down 5 points from October and 30% lower than in November 2020 when the barometer stood at 167. Once again, weakness in the barometer was tied to weaker sentiment regarding current conditions as well as weaker expectations for the future. The Index of Current Conditions declined 7 points in November to 128 and the Index of Future Expectations fell 4 points to 110. November marked the lowest reading of the year for all three measures of producer sentiment as concerns about sharp rises in production costs coincided with concerns about a host of other issues ranging from prices for crops and livestock to environmental and tax policy as well as COVID. The Purdue University-CME Group Ag Economy Barometer sentiment index is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from Nov. 15 to 19, 2021.
Standing in contrast to the improvement in the Farm Financial Performance Index, the Farm Capital Investment Index declined 7 points to a reading of 39, the index’s lowest reading since April of 2020. Weakness in the investment index seems to be a function of supply chain problems along with concerns about rapidly rising input costs. For example, 44% of producers in this month’s survey said their farm machinery purchase plans were impacted by low farm machinery inventories and, when asked what their biggest concerns are for their farming operation in the upcoming year, nearly half (47%) of survey respondents chose higher input costs as one of their biggest concerns. Although supply chain problems continue to impact the building industry, there was a modest uptick among producers with respect to their plans for constructing new farm buildings and grain bins with fewer producers this month saying they plan to reduce their construction plans compared to a year earlier.