December Ag Economy Barometer 010522
By RHONDA BROOKS January 5, 2022
The Ag Economy Barometer rose a modest 9 points in December. The upward shift marks only the second positive move in overall sentiment since last May.
Producers’ improved perspective on their financial position appeared to be the primary driver of the sentiment improvement, according to Jim Mintert, Purdue professor of agricultural economics and manager of the Barometer.
“People felt better about where their farms were headed towards the end of 2021,” he told Chip Flory, host of AgriTalk, on Tuesday.
“Many had some good, tail-end prices in December and felt very good about their financial performance. Their responses reflected an increase or improvement in people’s income statements and, perhaps, in their balance sheets as well.”
However, looking forward, Mintert says farmers are very concerned about 2022 and the many unknowns they face regarding crop production.
Fertilizer Availability and Costs
When asked what their biggest concerns are for their farming operation, the top answer was higher input costs. Forty-seven percent of respondents chose it from a list that included lower crop and/or livestock prices, environmental policy, farm policy, climate policy and COVID’s impact.
In addition, nearly four out of 10 respondents said they expect farm input prices to rise by more than 30% in 2022, compared to 2021.
“That’s unprecedented,” Mintert says. “It’s not only about input costs, it’s also concern over the inability to secure some of those inputs.”
Right at 40 percent of producers in the survey said they’ve “experienced difficulty” in purchasing crop inputs for the 2022 crop season. As for which inputs cause the most concern, fertilizer availability was the No. 1 response.
Machinery Or Too Costly?
Forty-five percent of respondents said that tight farm machinery inventories are impacting their machinery purchase plans.
“So, people are experiencing difficulty across the board with respect to securing what it is they need to put a crop in the ground in the spring of ’22,” Mintert says.
Farmers also indicated they believe land prices will continue their upward trend this year.
“Sixty-one percent of people responding to the survey think prices will go up, and the No. 1 reason they gave for that will be non-farm investors,” Mintert says. “That response was a real surprise to us.”
Mintert says he is not necessarily of the same mindset. He anticipates price drivers will more likely be other farmers and possible increases in interest rates.