Ag Economy Barometer: farmers more optimistic about the future
Farmers are more optimistic about the future, according to the latest Purdue University-CME Group Ag Economy Barometer.
Jim Mintert, the survey’s principal investigator and director of Purdue’s Center for Commercial Agriculture, says the rise in sentiment was likely driven by an improvement in commodity prices at the time of the survey.
“From the 12th to the 16th of June, that’s when commodity prices were still in that rally that got started at the very end of May and continued through about the middle of June. Of course, commodity prices continued to increase a few days after we were collecting data before corn prices broke off pretty hard. So, we caught that upswing and people became more optimistic.”
He tells Brownfield it was also driven by expectations for profitability in the livestock sector.
“It’s always a little hard to tell exactly what was driving that, but if you think about how our survey is put together, about 19 percent of the people in a survey every month have a beef enterprise. And a majority of them are cow calf producers because there’s so many more cow-calf producers than there are cattle feeders,” he says. “I think that was probably the biggest driver in that improvement on the livestock side, although we were in the midst of a hog price rally as well. It was a combination of things that made people more optimistic about the future.”
According to the barometer, a more optimistic view of the future was also reflected in the Farm Financial Performance Index, which rose 10 points in June. Although respondents were more optimistic about both crop and livestock returns this month, expectations for “good times” for livestock producers increased more than for crop producers. Fifty percent of respondents said they expect “good times” for livestock producers in the next five years, up from 37 percent who felt that way in May, which was nearly double the increase in the percentage of respondents expecting “good times” for crop producers. Optimism about positive returns for cattle producers, especially cow-calf operations, was likely a key factor behind the positive livestock outlook.
The overall barometer rose 17 points this month to a reading of 121. The Index of Future Expectations rose 25 points to 123. The Index of Current Conditions held steady at 116.
According to the survey, the contrast in producers’ perspectives on current conditions vs. future expectations was made clear when examining responses to individual questions in the June survey. When asked to compare their farm operation’s situation today with a year ago, 40 percent of respondents said their operation was “worse off” financially than a year earlier vs. 37 percent who felt that way in May, while just 15 percent chose “better off” vs. 17 percent who made that choice in May.
When asked to look ahead one year, respondents’ attitudes changed. In June, 20 percent of respondents said they expected their financial condition to improve over the next year, compared to 13 percent in May. Meanwhile 32 percent expect their farm’s financial situation to decline over the upcoming year, compared to 44 percent in May.
Producers improved perspective on the future was not focused solely on their own farms, but extended to all of U.S. agriculture. The percentage of producers expecting good times for U.S. agriculture in the upcoming 5 years rose 8 points to 33 percent while the percentage expecting bad times fell 3 points to 41 percent.
The Ag Economy Barometer is a monthly national survey of 400 U.S. agricultural producers.
Audio: Jim Mintert