Madison County farmers grateful for above-average crop yields, but wary of high interest rates
Nov. 11—ANDERSON — Buoyed by better-than-expected yields in their fall harvests, local farmers are cautiously optimistic about their financial positions heading into the winter, echoing sentiment found in a recent Purdue University survey.
Crops "have been pretty good," according to Cory Bohlander, president of the Madison County Farm Bureau. He said his corn and bean yields will likely end up above average, "a pleasant surprise given how dry we were through the summer," he noted.
Bohlander and other farmers shared optimism that, despite projections of increased supply, the risk of lower crop prices will be minimal in the weeks to come. Those attitudes are evident in Purdue's latest Ag Economy Barometer, a monthly index that surveys farmers and agribusiness leaders to provide a measure of the health of the U.S. agricultural economy.
In October, the index rose four points to a reading of 110, which analysts said indicates farmers' modestly improved perspective on their current operating conditions, as well as their expectations for the future.
"Farmers in this month's survey...felt somewhat better about their farms' financial situation than a month earlier," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture.
One concern voiced by farmers in the survey was a lack of movement with interest rates, which have remained stubbornly high after the Federal Reserve raised its benchmark rate 11 times since March 2022, including four times this year, in an effort to cool inflation. Those rates remain between 5.25% and 5.5%, making the climate for significant capital investments hostile for many farmers.
"Our biggest concern is interest rates," said Mike Shuter, president of Shuter Sunset Farms, a fourth-generation family farm near Frankton which specializes in corn, beans, cattle and pork production.
Shuter said he sees the Fed's approach to raising interest rates as overly aggressive, which constrains his ability to borrow money for new equipment or consider land purchases.
Bohlander echoed those concerns.
"It's gotten a lot more expensive to borrow money now, so we're more aware of that, and maybe not as willing to buy some things if we have to borrow money to buy it," he said. "There's still a lot of cash being used to buy land, and you'd have to think pretty hard about borrowing a lot of money to buy a farm at this point in time at current interest rates."
He added that the ongoing conflict in the Ukraine and a potential escalation in the Israel-Hamas war could rattle worldwide commodity markets, which in turn could indirectly affect prices on input materials like fertilizer, seed and other necessities ahead of next spring's planting season.
"We pay attention to it, and we prepay when we can, when we think the price is good," Bohlander said. "If we think the price is going to go up by springtime, then it's probably a good idea to go ahead and prepay and lock some of that price in.
"You don't know what (prices are) going to do, and a lot of that has to do with what goes on overseas," he added. "There are a lot of things at play that dictate prices a lot of times."
Follow Andy Knight on Twitter @Andrew_J_Knight, or call 765-640-4809.
