Farmers’ fears of rising costs and high interest rates grew as optimism for future conditions weakened in June.
The Farm Capital Investment Index fell to 32 in June, just 1 point above its all-time low in April, according to the Center for Commercial Agriculture at Purdue University, released July 2.
The slowdown in investment may come from uncertainty around the upcoming presidential election, Ashtyn Hurst, marketing manager of Friona, Texas-based equipment dealer LoneStar Ag, told Equipment Finance News.
“With 2024 being an election year, a lot of people are scared to buy and they’re being more hesitant with money,” Hurst said.
LoneStar Ag began the year successfully, but sales started slowing in June after the company finished selling to those on its waiting list, Hurst said.
“We have a bunch of [Kubota RTVs and skid steers] and they’re still selling, they’re not going as quickly as they were,” she said. “We’re hoping that July picks back up a little.”
More farmers view rising interest rates as a top concern each month since February, with 23% of those surveyed listing that concern compared to 18% in February. Rising interest rates were the third most frequent concern, preceded by lower output prices at 25% in June and high input costs at 33%.
Farm financial performance rise
Farm financial performance rose 3 points from May to 85 in June. The rise follows seasonal trends — expectations diminish in spring, then rise as spring crop season goes on, according to the report.
It is unclear whether 2024 will continue to follow last year’s pattern, when prices rallied in the fall after a good crop yield, according to the report.
Future expectations fall
Confidence in future expectations dropped 5 points from May to 112 in June, while current conditions sentiment rose 1 point from May to 90 in June.
Similarly, short-term farmland values were unchanged from May at 115, while long-term farmland values dropped 7 points from May to 152 in June.
Energy leasing companies continued to approach farmers in June, though slightly fewer than in May. Of the 16% of surveyed farmers who received solar energy offers, 69% were offered more than $1,000 per acre, and more than a quarter of surveyed farmers were offered more than $1,500 per acre.
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