The latest Ag Economy Barometer from Purdue University shows just how concerned farmers are about the agriculture economy. Farmer sentiment fell sharply during July on heels of commodity price declines and concerns over trade.
“The Ag Economy Barometer declined 26 points to a reading of 117 in July, driven by sharp reductions in both the Index of Current Conditions, which fell from 138 to 99, and the Index of Future Expectations, which fell from 146 in June to 126 in July,” says James Mintert, Extension economist at Purdue.
The reading of 117 brings the index back to the level observed immediately following the 2016 presidential election. While the July decline is the largest one-month decline in the Ag Economy Barometer’s three-year history, it’s still well above the low point of 92 observed in October 2016, prior to the elections.
According to Mintert, the survey shows farmers are very concerned about the trade conflicts.
“In our July survey, 54% of the respondents said that they expected a trade war,” he explains. “And then we asked about the impact on income. Over 70% of the respondents that expected an impact said that they thought their income would decline by 10% or more, so (they’re) very, very concerned about the trade issues.”
Farmers’ concerns about the ag economy also spilled over into their willingness to make significant investments, Mintert says.
“Every month, we asked a question that asks people whether or not now's a good time to make large investments in their farming operation. And the percentage of people saying that this was a bad time jumped to 73% from 60% a month earlier. So, it's really a pretty big change,” he explains. “In fact, when you look at the way that question’s analyzed with both, whether it's a good time or a bad time, it was the most negative response we've gotten to that question since March of ‘16.”
Moreover, producers are not optimistic about farmland values either.
“When we ask producers to look 12 months ahead with respect to farmland values, 31% of them said that they expected lower farmland values in the year ahead,” Mintert says. “That compares to 21% a month earlier. So that was a big jump, a big change in our survey, and really wipes out the positive improvement we've been seeing going back to last fall.”