Increased confidence in the Fed may be leading more producers to expect interest rates to remain steady or decline compared to earlier in the year, according to the April Ag Economy Barometer reading.
The monthly report published by Purdue University and the CME Group shows fewer producers expect interest rates to rise over the next year, even though the majority still see higher rates ahead.
“This month 34% of respondents said they expect the U.S. prime interest rate to remain unchanged or decline over the next year compared to 25% of producers who felt that way in February,” James Mintert and Michael Langemeier of the Purdue Center for Commercial Agriculture noted in the barometer's April report. “At the same time, two-thirds (66%) of producers expect interest rates to keep rising, compared to 75% of respondents who felt that way in February.”
“A shift in farmers’ expectations regarding future Federal Reserve Board interest rate policy could be one reason the financial performance index improved this month,” they added.
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The April survey also found that out of all farm bill areas, 40% of producers view crop insurance as the most important title, followed by 31% who prioritized commodity programs. Some 13% of respondents called conservation programs their top priority, followed by renewable energy and research and extension funding, which both received recognition from 8% of respondents.
Four out of 10 producers think that passage of a farm bill in 2023 is either very likely (12%) or at least somewhat likely (28%). An additional 29% believe that the bill’s passage this year is either very unlikely (13%) or somewhat unlikely (16%).
Purdue University and the CME Group publish the Ag Economy Barometer on the first Tuesday of each month. Data is collected from 400 agricultural producers through telephone surveys; the April data was collected from April 10-14.
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