Despite the continuing trade war and mounting criticism of the President’s policy, farmers are more confident than ever about the future.
In its latest survey, DTN reports that farmer optimism has taken a big jump. “These results are not just record-setting, but they are also extremely surprising,” said Greg Horstmeier, DTN editor-in-chief. “What’s more is that we found consistency across all regions and types of farmers studied in the survey, whether Midwest, Southeast, or Southwest, and whether crop grower or livestock producer.” Farmers indicate they are more confident than ever, pushing the index to 164.8, exactly 30 points higher than the most recent index in spring of 2018.
Not only are farmers nationwide more optimistic,$ but farmers here in the Midwest represent the biggest change in attitude since the last survey just before planting. “In March, midwestern farmers rated a 116; but in the August survey they had jumped to a 162, so we have seen a huge jump in optimism in the Midwest,” stated Horstmeier.
One group that is not very optimistic are agribusiness owners. “Overall, agribusinesses sharply disagree with what farmers are saying,” Horstmeier said. “We believe this is due to the overall farm economy; farmers have slowed their spending with agribusinesses over the past four years and those businesses are feeling the pinch.” The overall Agribusiness Confidence Index is 95.6, which is down 15.4 points from spring of 2018 and down 11 points from a year ago. Agribusinesses are positive about their current situation, rating it at 110, up 15.8 points from a year ago.
Horstmeier told HAT that the majority of farmers surveyed feel their financial situation will improve in 2019, “When you boil this down to what it means for agriculture in America, there are trends that farmers have adapted to the current farm economy and are positive about their present and future conditions. Conversely, we are starting to see rural agribusinesses that support America’s farmers begin to struggle and may be a leading indicator of where agriculture is heading over the next few years.”
The Purdue/CME barometer paints a different picture. It reported Agricultural producer sentiment dropped to its lowest level since October 2016, as producers expressed concern over worsening farm financial conditions. The September barometer reading was 114, down 15 points since August. The barometer is based on a monthly survey of 400 agricultural producers from across the country.
“The barometer readings have been unusually volatile over the past few months,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Concerns about the ongoing impact of trade conflicts, and especially China’s tariffs on imports of U.S. ag products, continue to reverberate throughout the U.S. agricultural sector.”
Producers indicated that financial conditions on their farms deteriorated significantly as 2018 unfolded, and their expectations for the future also weakened. In September, 54 percent of farmers surveyed said their farm’s financial condition was worse than a year earlier, up from 38 percent who felt that way in June. The September survey also indicated that 33 percent of producers expect their farm’s financial condition to be worse a year from now, up 15 points compared to responses received to the same question in June.
Trade conflicts and tariffs continue to be a source of angst among U.S. farmers. When asked whether they expect trade conflicts to lower their farm’s net income, more than 70 percent of producers surveyed said they expect lower income in 2018 because of trade disruptions, with a large majority of respondents saying they expect an income decline of more than 10 percent.
The negative outlook was particularly noticeable when producers were asked whether now is a good time to make large investments in farm machinery and buildings for their farming operation and on next year’s farmland cash rental rates. In September, 78 percent of respondents said it was a bad time to make large investments and just 20 percent said it was a good time to invest, the lowest combined reading on large farm investments since the barometer launched in October 2015. Farmers also indicated that worsening farm financial conditions could weigh on farmland cash rental rates in 2019 as nearly two-thirds of farmers surveyed said they expect to see lower cash rental rates for farmland next year.