Mike Shuter, owner of Shuter Sunset Farms, is holding on to his old combine until the new one he is leasing is delivered in mid-October. Ordered last September, supply chain bottlenecks and a workers’ strike has pushed back the shipping date of the new equipment until the middle of this year’s harvest season.
John P. Cleary | The Herald Bulletin
FRANKTON — The summer heat is baking the fields that Mike Shuter hopes to harvest this fall.
But Shuter, the owner of Shuter Sunset Farms, has concerns beyond the near-drought conditions that have blanketed the region for weeks.
He is leasing a new combine for his operation, but lingering supply chain bottlenecks — along with ripple effects from a workers’ strike last year at a John Deere factory in Illinois — have pushed the ship date on the new piece of equipment back to mid-October, when harvest season will be in full swing.
“We’ve still got our previous combine sitting on our lot, and it won’t leave until we get the new one,” Shuter said.
When it comes to making capital investments critical to sustaining their operations, Shuter and many other farmers in Indiana are holding back — and appear poised to do so well into next year. In addition to headwinds unique to the agricultural sector, such as rising prices for seed, fertilizer and other input items, farmers are dealing with stubbornly high inflation and record fuel prices. It’s a perfect storm of bad economic news that has sent a leading agricultural economic indicator tumbling to record lows.
The Purdue University/ CME Group Ag Economy Barometer, a monthly index measuring the health of the nation’s agricultural economy, came in with a reading of 97 in June, its lowest mark since April 2020. The barometer’s Index of Future Expectations also fell five points to a reading of 96, marking that category’s lowest level since October 2016.
The report is based on a telephone survey of 400 agricultural producers on economic sentiment each month.
“Rising input costs and uncertainty about the future continue to weigh on farmer sentiment,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Many producers remain concerned about the ongoing escalation in production costs as well as commodity price volatility, which could lead to a production cost/income squeeze in 2023.”
Those concerns are prompting farmers to hedge their bets against accumulating too many crops later in the year.
“Everybody’s kind of sitting on their hands waiting to see what’s going to happen,” said Jon Sparks, who serves on the Indiana Farm Bureau’s board of directors and oversees a district that includes Delaware, Hamilton, Hancock, Henry and Madison counties. “You don’t want to get stuck with a big chunk of inventory that you can’t market at a good price at some point.”
Shuter acknowledges that both input prices and their availability have prompted him to consider changing up his crop mix for next year. But since about 20% of his crops are organic, Shuter said he has a slight cushion. Plus, with 4,000 hogs, the farm has the ability to mitigate its need for fertilizer.
“We’ve been about two-thirds corn and one-third beans since Poet (Biorefining) came into the area. I don’t see us changing that,” Shuter said. “Do we cut back on nitrogen? Maybe. Do we substitute some cover crops for nitrogen? Maybe. The question is, how can we maintain our production and maybe eliminate some of these (input) costs?”
Sparks, who farms about 2,000 acres in Delaware County, said the ongoing war in Ukraine is another factor that has put “a lot of balls in the air” for farmers as they prepare for harvest and continue to plan for next year. The question of capital investments, he said, will likely shadow them for months to come.
“There still is some appetite for people to update some things,” Sparks said. “You likely won’t feel the brunt of the higher input costs until about six months from now. We don’t have a crystal ball to see what will be going on in the world, but I don‘t see people being super aggressive in that market in the months to come.”
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