As input prices fall, farmers’ concerns shift to commodity prices

For the past year, the top concern, by far, of U.S. farmers polled by Purdue University has been higher input costs. Now, it’s a tie between lower commodity prices and higher input costs at 28% each, said the monthly Ag Economy Barometer on Tuesday.

“This alignment suggests that U.S. farmers are concerned about a possible cost/price squeeze leading to lower farm incomes,” said agricultural economists James Mintert and Michael Langemeier, who oversee the barometer. “For the first time, the percentage of producers choosing lower crop/livestock prices [28%] matched the percentage of producers who chose higher inputs costs.”

A year ago, 42% of respondents said higher input costs were their top concern out of the six options in the poll, while 16% chose lower commodity prices. Now, four of 10 producers said they expect crop input prices will be as much as 10% lower than in 2023, and only one third expect to pay more. Meanwhile, analysts commonly say prices for this year’s crops will be lower than last year. Net farm income, a USDA measurement of farm profitability, was forecast to decline this year; income in 2023 was the second-highest on record.

The barometer, a gauge of farmer sentiment, fell to 106 in January, down by 8 points in a month, and below the rolling 12-month average of 115. “Anticipated lower farm income in 2024 significantly influenced the decline,” said Purdue.

Purdue interviews operators with production worth at least $500,000 a year for the barometer. USDA data say the top 7.4% of U.S. farms have $500,000 or more in annual sales. The survey has a margin of error of plus-or-minus 5%.

The Ag Economy Barometer is available here.