Farmer Sentiment Mixed Heading into 2022
January 20, 2022
It’s been a tumultuous few years of pandemic-induced uncertainty for American agriculture, and optimism stirred with uncertainty seems to be the order of the day as farmers head into 2022.
After weak readings through the fall, the December 2021 Purdue University/CME Group Ag Economy Barometer rose 9 points to a reading of 125. The Barometer nosedived from 168 to 121 between February and March of 2020.
Then, since its inception in 2015, it hit both an all-time low and an all-time high in the rollercoaster year of 2020. The low was 96 in April 2020; the high was 183 just a few months later in October. Readings stabilized and leveled off through most of 2021 until September, when concerns about input costs started to weigh on farmers’ responses.
December was the second month in a row that farmers reported stronger financial performance for their businesses. But rising production costs and concern about availability of inputs still weigh heavily on their minds.
More than half (57%) of the 400 farmers surveyed for the December Barometer said they expect input prices for the 2022 crop year to rise more than 20% year-over-year, and nearly 40% believe that increase will be closer to 30%. Supply chain issues have made access to inputs more challenging, with respondents noting difficulty securing:
Fertilizer – 37%
Herbicides – 28%
Farm machinery parts – 24%
Insecticides – 17%
The recent, meteoric rise in dairy markets have dairy producers feeling cautiously optimistic, but high feed costs are tempering that optimism for those who purchase much of their feed. Wisconsin dairy farmer and consultant Daniel Olson has hopes that 2022 will be a banner year for a battered sector of agriculture.
“This could be a record year for dairy,” stated Olson. He said income over feed costs at current prices is “good, but not incredible” for producers buying all of their feed. But for those growing most of their feed and/or feeding a high-forage diet, 2022 could be a historically profitable year.