Farmers less confident in economy, study shows
Staying optimistic about the U.S. economy right now may seem next to impossible. Now a growing number of farmers -- a traditionally optimistic group in general -- are expressing concerns in the financial bedrock of the country.
Agricultural bank Rabobank released the results of its "Farm and Ranch Survey" for Spring '09 this week, and the results are basically as expected: Just like in the macroeconomy, the ag sector's anxiety about the unstable economy are growing.
"Twice as many farms than last year join those impacted by worsened year-over-year income levels," according to the study released Monday. "While there is some optimism that things will get better next year, [the] future outlook is similar to that measured in 2008 with half of the farms expecting continued income deterioration. As such, confidence remains less optimistic."
Economic worries are also a function of geography; in the Rabobank study, results indicate the amount of anxiety about the economy changes distinctly by location.
"Most farmers are concerned about the U.S. agriculture economy; more so in the South than in the North Central region. The impact of the overall agricultural economy can be felt at the individual farm level. Close to 9 out of 10 farms are concerned about their own situation, with nearly 8 out of 10 saying that they would have been more optimistic if the current economic conditions were better," according to the survey. "In looking ahead, nearly half of the farms expect the agricultural economy to worsen next year, particularly in the West when compared to North Central [region]."
Input costs were one bright spot in the survey, as some farmers found some financial relief in lower production costs. But, a high percentage also said they don't expect that price relief to last very long.
"Some relief is found in the cost of production. While income has been adversely impacted, input costs have improved for significantly more farms," according to the Rabobank survey. "Furthermore, nearly one third of the farms expect costs to get better next year."
One bellwether of economic sentiment on the farm is the farm equipment and machinery market. On the basis of numbers alone, farmers responding to the Rabobank survey said they expected equipment and machinery purchases to remain steady through 2009. While it's consistent with '08 numbers, there's one difference: More farmers are buying used machinery, which could indicate some belt-tightening.
"Many more farms this year are resorting to buying used equipment, with only 1 in 10 among potential buyers looking to purchase new equipment versus 4 times as many last year," according to the Rabobank survey. "The lack of interest in purchasing equipment, whether new or old, exists largely among farmers who are concerned about their financial situation, comprising three quarters of the farms assessed."
A final key finding in Rabobank's survey of economic outlooks on the farm deals with risk management. Results indicate growing anxiety with market volatility, and more farmers are seen taking advantage of ways to hedge against volatile markets.