Farmer sentiment declines, as concern over trade continues

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WEST LAFAYETTE, Ind. — There was a modest drop in agricultural producer sentiment in December as farmers’ perception of both current and future economic conditions weakened, according to results from the Purdue University/CME Group Ag Economy Barometer.

The December barometer reading of 127 was 7 points lower than November. The barometer is based on 400 survey responses from agricultural producers across the country. Both of the barometer’s two sub-indices declined in December: the Index of Current Conditions fell 6 points to 109, and the Index of Future Expectations fell 8 points to 135.

Declining sentiment

When comparing these readings to December, 2017, the Index of Current Conditions is substantially lower, registering a decline of 30 points, while the Index of Future Expectations actually improved from year-to-year with an uptick of 15 points.

“Over the course of the last year, producers’ impression of current economic conditions on their farms has declined markedly,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “But at the same time their expectations for future economic conditions have held steady. As a result of this mixed view, farmers appear to be cautious about making large investments in their farming operations.”

For example, in December, 2018, the Large Farm Investment Index, which measures whether producers feel this is a good time to make large farm investments, fell 5 points to a reading of 51. This marked a 29 point drop from one year ago when it reached a reading of 70.

Those same concerns were also apparent when producers were asked whether now is a “good time” or “not a good time” to bring a new generation of family into the business. Just 42 percent said now was a “good time” compared to approximately half during the previous two years.

Looking ahead

However, when looking ahead five years, 65 percent of producers expect conditions to be more favorable to the next generation. International agricultural trade issues continue to cause concern and could be causing producers’ reduced confidence in current economic conditions.

When producers were asked whether they expect exports to increase or decrease in the next five years, 59 percent indicated that they expect ag exports to increase, down 7 points from November’s survey response, whereas 26 percent expect ag exports to decrease, up from 10 percent on the November survey.

Read the full December Ag Economy Barometer report at http://purdue.edu/agbarometer.

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