Farmers Pinched by Inflation
UNDATED -- Despite record-high grain prices, local farmers are worried about the future.
The Purdue University – CME Group Ag Economy Barometer fell in May to its lowest level since April of 2020.
Jeremy Blank is a farmer in the Foley area and a salesperson at Arnold’s Case-IH in St. Cloud. He explains what’s weighing on farmer’s minds.
Skyrocketing input costs are really getting high in all sectors, interest is going up. If you look at the current prices, it's pretty nice. But that can change any day too. Inflation is very high, as everybody knows. So if our ending crop production is low, and our price gets a little lower, this could change overnight.
The report claims that 38% of farmers expect their farm’s financial position to worsen in 2022, compared to 29% in the same report one year ago. Over the last 13 months, the Farm Financial Performance Index has fallen 41% from its high.
The value of good quality farmland has jumped 20% since January. A report of recent land sales auctions found the average sales price of good quality farmland in Minnesota neared $1,000 per acre. Farmers saw stronger commodity prices and investors are looking for a hedge against inflation. Blank explains who the buyers are.
Buying land right now doesn't cash flow, you gotta be an established farmer. Someone coming into this new, it won't pencil out. I think there's investment companies around and people with secondary incomes, they don't necessarily have to live off the farm income. Those are the people who buy in right now.
Increased amounts of farmland came on the market at the end of 2021 due to concerns about possible tax law changes. The amount of land sold by auction in 2022 is up 106% from a year ago.