A monthly measurement of how farmers and ranchers feel about the ag economy went up slightly in January as producers say they’re feeling better about their future expectations.
The Ag Economy Barometer from Purdue University and the CME Group measured a reading of 130 in January, a slight improvement over December’s figure and the second straight increase.
“Although producers were a bit more optimistic about the future this month, they again reported expectations for tighter margins in 2023 than in 2022,” Purdue’s Jim Mintert said.
The January survey also polled farmers about their upcoming operating loans for the 2023 growing season, something 22% said they expect will be larger than their 2022 note. That figure is a slight drop from the 27% who said the same thing in early 2022. What’s more, a shrinking percentage of producers say their loan will be larger due to the carry-over of unpaid debt. In January 2020, more than 30% of producers said that was the case; the figure dropped to 20% in 2021 and 13% in 2022 before dropping to the current figure of 5%.
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“The sharp decline in the percentage of producers expecting to carry over unpaid operating debt is important,” Mintert said. “It supports the idea that the vast majority of producers are entering 2023 in a strong financial position despite the rise in production costs.”
While fewer producers are carrying debt into the new year, many are expecting higher input costs to take a bite out of their profitability. Of the 22% of respondents expecting to need a larger operating loan, 80% said it was due to higher input costs.
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