Making choices in the agriculture industry can be challenging. Fortunately, the Ag Barometer Survey aims to help with decision making by providing valuable insight to current economy conditions. The Purdue Univeristy/CME Group Ag Economy Barometer is a nationwide measure of the health of the U.S. agriculture economy. Four hundred farmers participated in the survey. Agriculturalist across the nation can learn from the results.
The most recent survey showed the index falling to 101. This is the lowest reading since October of 2016. Driving this number are current conditions as well as future expectations. Economists say the drop has erased all the gains since the November 2016 election. Natural disasters, trade wars, and lack of trade deals are a few of the causes. It is also important to consider the timing of the survey. Data collection occurred in the midst of a wet planing season. However, it was before USDA announced the second round of trade dispute payments for U.S. crop producers.
Learn More at agweb.com
Although some questions vary month to month, a few remain constant. These five questions gauge the Ag Economy Barometer value.
- We are interested in how farmers are getting along financially. Would you say that your operation today is financially better off, worse off, or about the same compared to a year ago?
- Now, looking ahead, do you think that a year from now your operation will be better off financially, worse off, or just about the same as now?
- Turning to the general agricultural economy as a whole, do you think that during the next twelve months there will be good times financially, or bad times?
- Looking ahead, which would you say is more likely, U.S. agriculture during the next five years will have widespread good times or widespread bad times?
- Thinking about large farm investments – like buildings and machinery — generally speaking, do you think now is a good time or bad time to buy such items?
Learn more about survey collection details from Purdue University.
Confidence in Trade Deals
Information centered around trade deals and disputes are looked at in two ways – expectation of resolutions and perception of a positive outcome.
The recent survey showed only 20% of respondents expected the trade dispute with China to be resolved by July 1. By comparison, 45% of those asked in March, when the question was first posed, expected a resolution.
“Farmers are becoming somewhat less optimistic that the trade dispute with China will ultimately be resolved in a way that’s beneficial to U.S. Agriculture,” said Jim Mintert, with the Center for Food & Agricultural Business at Purdue University. “When we asked them about that back in March, I think 77 percent said that they expected a favorable outcome.”
Results now show 65% saying they expect a favorable, positive outcome with trade deals in the long run. While this is still a majority of farmers, it’s much smaller than before and economists expect that trend to continue.
Read more at cnbc.com
Capital Investments and Farmland Value
The index on making large capital investments for the farm fell to a reading of 37. This is the second month in a row the number has declined. Furthermore, this reading marks the lowest score ever. Data collection started in the fall of 2015.
Farmer’s sentiment on farmland values provides a look at the short-run and longer-term view of the ag economy. Since the beginning of 2019, the number of farmers expecting farmland values to decline over the upcoming year has been increasing. Recently, only 39% of farmers expected farmland values to rise over the next five years. So, farmers appear to be less optimistic about farmland values in both the short-run and long-term.
Gain more insight at ag.purdue.edu
Results are released the first Tuesday of each month. As June wraps up, we patiently wait the results that will be announced in the upcoming weeks.