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Ag Barometer Shows Best One-Month Improvement
U.S. farmers have found optimism, study shows.
In its monthly results released Tuesday, the Purdue University/CME Group Ag Economy Barometer shows that in January, U.S. farmers were more optimistic about the agricultural economy than a month earlier.
The January barometer read 135, up 9 points from December’s 126, according to a Purdue University press release.
The improvement in sentiment was driven by increases in both the Index of Current Conditions, which climbed 5 points to 144, and the Index of Future Expectations, which climbed 11 points to 131, the press release stated.
This uptick marks the largest one-month improvement in future expectations since January 2017.
The barometer is based on a monthly survey of 400 agricultural producers from across the U.S. Each month, survey respondents are asked whether their farm operations are financially better off, worse off, or about the same, Purdue University economists stated in the press release.
In January, 43% said their farms were financially worse off than a year ago, while 14% said their farms were financially better off.
James Mintert, director of Purdue University’s Center for Commercial Agriculture and the barometer’s principal investigator, says that the 43% number is significant.
“To help put January’s responses in perspective, the percentage of farmers who felt their operations were financially worse off reached a high of 81 in August 2016,” Mintert stated in the press release.
He added, “Since April 2017, the share reporting that their farms were financially worse off has consistently fallen below 50%. The reduction has been an important driver of the ongoing improvement in the Index of Current Conditions.”
The Purdue University ag economists see the passage of the Tax Cuts and Jobs Act of 2017 as another factor propping up farmer attitudes.
The press release stated that the surveyed producers were asked to rate the likely impact on their farming operations, as well as their families’ tax burdens.
“Nearly half of all producers said they expect the tax bill to be beneficial to their operations. Conversely, 19% said they expect the tax bill to have a negative impact on their farming operations. The remaining 35% gave a neutral response,” the ag economists stated in the press release.
When it came to producers’ expectations for their families’ tax burdens, 43% said they expect a decline, 18% expect an increase, and 40% said they expect their families’ tax burdens to stay about the same, according to the monthly press release.
“It’s possible the 40% of respondents expecting no changes in their taxes and the 35% who provided a neutral rating could reflect uncertainty regarding the specific content of the tax bill and the fact that IRS regulations implementing the tax bill have yet to be issued,” Mintert stated in the Purdue University press release.
Each quarter, a parallel survey gauges the sentiment of 100 agricultural thought leaders. Sentiment among thought leaders declined sharply from October’s survey, falling from 152 to 127. The decline in agricultural thought leaders’ sentiment was driven in part by their more negative perspective on current conditions than they had last fall, according to the press release.
Read the full January Ag Economy Barometer and Ag Thought Leaders Survey report at purdue.edu/agbarometer.