Falling crop prices and rising costs for fuel and seeds are making farmers less optimistic about future profits than they were in December, according to a survey-based index produced by DTN/The Progressive Farmer.
Farmers rated confidence in their prospects in 12 months with an index score of 87.4, compared with 94 in December and the lowest since the survey was inaugurated in April 2010, the agricultural news service said today in a report. Lower confidence reflects expectations of falling prices for crops including corn and higher production costs, said Dave Miller, the chief economist for the Iowa Farm Bureau Federation in Des Moines.
“2012 is likely to be a year with declining markets for major crops,” Miller said in a telephone interview on March 23. “Seed costs are up, diesel is up, and land rent is up. You’re going to see margins squeezed.”
Farm net income probably will fall 6.5 percent to $91.7 billion this year from a record in 2011 as planting increases and rising expenses trim profits, the U.S. Department of Agriculture said last month. Spending on fuel will rise 1.3 percent to $17.2 billion, pesticide costs will jump 4.5 percent to $11.3 billion, and electricity will increase 5.4 percent to $4.8 billion, the department said.
Corn prices paid to farmers for this year’s crop may fall 19 percent to $5 a bushel, while wheat will decline 14 percent to $6.30 a bushel, and cotton will slide 11 percent to 80 cents a pound, USDA Chief Economist Joe Glauber said last month.
The DTN/Progressive Farmer survey also asked respondents how positive they feel about their current circumstances. The present situation index was 140.2, higher than the rating of 134 in December and creating an overall confidence index of 108.5, down from the previous mark of 110.
The Agriculture Confidence Index was compiled after surveying 500 farmers and ranchers between Feb. 27 and March 9. The next survey will be in September, before the harvest.
The survey benchmark of 100 is based on the initial April 2010 survey.
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