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Farmers are more optimistic due to Trump’s trade deal, Ag Barometer shows

The percentage of farmers considering retiring is going up, according to the barometer.

DES MOINES, Iowa -- President Trump’s trade deal with China has the U.S. farmers more hopeful for the future of the agricultural economy, according to the latest results of the done deal with Purdue University/CME Group Ag Economy Barometer.

In January, the barometer’s reading for the Index of Current Conditions rose just one point. However, the Index of Future Expectations jumped up 24 points since December to a reading of 179.

The farmers’ hopefulness jumped as the Phase One trade agreement between the U.S. and China was being discussed and signed in mid-January, according to the Purdue University/CME Group press release Tuesday.

The Ag Economy Barometer is based on a midmonth survey of 400 U.S. agricultural producers and was conducted from January 13-17, 2020.

“The Phase One trade agreement has largely been considered a win for U.S. exporters, although few details are available regarding how the additional $200 billion in purchases by China will be distributed over the next two years and how much impact it will have on the U.S. farm sector,” James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, stated in the press release.

Regarding the soybean trade dispute, producers remain optimistic about the dispute’s resolution.

In January, 69% of those surveyed felt that the soybean trade dispute would be settled soon, up from 54% in December, and 80% felt that the outcome will be favorable to U.S. agriculture, up from 72% in December, according to the barometer’s January results.

At the same time, producers’ expectations for an increase in U.S. agricultural exports over the next five years has steadily improved. As recently as October, only 55% of producers expected agricultural exports to increase; however, starting in November and continuing through January, about 70% of those surveyed expect to see an increase in U.S. agricultural exports in the next five years.

According to the press release, each winter producers on the survey are asked about the rate of growth they expect for their farming operation over the next five years. Since the question was first posed in 2015, there has consistently been a small percentage of farmers who plan to grow rapidly and a relatively large group that either has no plans to grow or plans to exit or retire from farming.

“However, those who indicated they have no growth plans and/or expect to exit/retire has been rising steadily since 2018. For example, in January 2020, a combined 56% of farmers said that they have no plans to grow or plan to exit/retire, up from 50% in 2019, and up from 39% in 2018,” stated the authors of the Purdue University/CME Group Ag Economy Barometer.

Mintert stated in the press release, “The tremendous volatility the ag sector has experienced the last couple of years could be interpreted as a signal to producers to be more cautious regarding future expansion plans.”

Read the full January Ag Economy Barometer report here.

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