Interest rates are the top policy concern among farmers
Congress is on the cusp of overhauling the farm program but the top question among farmers about government action is interest rate policy, which lies outside the jurisdiction of the Senate and House Agriculture committees, said a Purdue University poll on Tuesday. Concern about interest rates coincided with the Federal Reserve campaign to squelch inflation through regular increases in interest rates.
More than one in three of the large-scale farmers surveyed for the monthly Ag Economy Barometer chose “interest rate policy” as the most important policy program affecting their farms in the next five years. Second-most important was the crop insurance program, selected by 27%, followed by environmental policy, at 16%.
The Federal Reserve was expected to raise interest rates by three-quarters of a percentage point on Wednesday, the fourth such increase in a row. Investors believe the monthly increases will continue into March, although in smaller increments, reported CNBC.
“Concern over rising interest rates grew once again in October and is adding to the unease among producers who are worried about its impact on their farm operations,” said agricultural economist Jim Mintert of Purdue.
Some 84% of respondents said crop insurance was “somewhat” or “very” effective in providing a financial safety net and 72% said the Price Loss Coverage and Agriculture Risk Coverage subsidies were “somewhat” or “very” effective. Crop insurance, ARC and PLC are part of the farm bill, which is due for reauthorization in 2023.
While interest rates were the top policy question, growers said higher input costs were their greatest concern for 2023. They also identified higher prices for equipment and new construction as the primary reason why large investments were a bad idea now. In each of those questions, interest rates ranked second.
The barometer is a gauge of the health of large farms in the agricultural sector. The current reading was a comparatively low 102, down 10 points from the previous month.
The barometer is based on a telephone survey of 400 operators with production worth at least $500,000 a year. USDA data say the largest 7.4% of U.S. farms top $500,000 in annual sales. The survey has a margin of error of plus or minus 5%.
The Ag Economy Barometer is available here.