Trade policy is top of mind for farmers, and it’s showing up in producer sentiment. The latest Ag Economy Barometer from Purdue and the CME Group indicates that concerns about trade, tariffs and profitability weighed on farmer sentiment this month.
Declining Confidence in the Future
Based on farmer surveys, the index fell 12 points to a reading of 140. While it’s still 25 points higher than it was back in October, weaker expectations for the future helped drag the overarching barometer lower.
“The future expectation index fell 15 points this month to 144, and that was still 20 points higher than it was in October. The future expectation index, of course, was what drove the Ag Economy Barometer down,” says Jim Mintert, ag economist at Purdue.
Uncertainty Around Trade and Tariffs
Trade and tariff uncertainty are reasons for that shakiness, according to Mintert. The survey found that producers’ expectations for exports in the next five years reached an all-time low, with those expecting a decrease in exports nearly matching those expecting shipments to increase.
“Producers’ outlook for ag exports, which predominantly have been a real source of growth in the U.S. ag sector for decades, has really shifted,” Mintert notes.
Farmers’ Policy Priorities Are Shifting
Farmers were also asked which policies or programs would be the most important to their farm in the next five years.
“There’s really been a shift with respect to the importance of trade policy versus interest rate policy since the November election,” Mintert says. “Back in August, 22% of respondents to the survey chose interest rate policy as one of their top concerns, versus 20% choosing trade policy. Since the election, over 40% — an average of 43% — of respondents to the survey have chosen trade policy as their top concern, while the percentage choosing interest rate policy as a top concern has been falling. This month, that number was just 10%.”
Mintert also points out that producers remain cautiously optimistic about farmland values, with the short-term farmland value expectation index holding steady at 118.
Concerns Over Trade Wars and Government Assistance
In addition, concerns about trade wars and potential government assistance were included in this month’s survey.
“If a trade war leads to lower prices for U.S. ag products, how likely do you think it is that farmers will receive compensation similar to the 2019 Market Facilitation Program?” Mintert asks. “Fifty-two percent of respondents said they thought that was likely, and 13% said very likely.”
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