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U.S. farmers feel slightly better about the ag sector’s economy, survey shows
In May, the latest reading, the index was up 7 points from April to a reading of 103, but it remained nearly 40% below its all-time high of 168 set in February 2020.
The Ag Economy Barometer is based on responses from 400 U.S. agricultural producers and this month’s survey was conducted May 18-22, according to the Purdue University/CME Group press release.
The Index of Current Conditions improved in May, up 11 points from April to a reading of 83, as did the Index of Future Expectations, up 4 points to a reading of 112.
In May’s survey, there was a slight increase in farmers’ intent to make large investments in their farming operations.
The Farm Capital Investment Index rose to a reading of 50 compared with just 38 a month earlier. While collectively all three of these indices improved in May, each was down more than 30% compared with February 2020, before coronavirus impacted markets, according to the Purdue University/CME Group press release.
“This month’s survey was conducted the same week that USDA announced the details of the Coronavirus Food Assistance Program (CFAP), so awareness of that program’s details could be one of the key reasons for this month’s barometer improvement,” James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, stated in the press release. “Yet some farmers remain worried about their bottom line and are still looking for options to alleviate those concerns.”
In the May survey, more than 70% of respondents indicated they were “very worried” (34%) or “fairly worried” (37%) about the impact of the new coronavirus on their farm’s profitability, up from 67% in April.
Their two biggest concerns were market access (42%) and financial (39%), with health and safety (11%) coming in third, according to the Purdue University/CME Group press release.
Providing further evidence of their financial concerns, two-thirds of farmers surveyed indicated they think it will be necessary for Congress to pass another bill to provide more economic assistance to U.S. farmers, the Purdue University/CME Group stated.
When asked about expectations for their financial position over the next 12 months, over 60% said they expect farmers’ equity positions to decline over the next year, up sharply compared with 28% of farmers who felt that way in February 2020, according to the Purdue University/CME Group.
Meanwhile, over 25% of farmers surveyed who rent farmland said they expect to ask their landlords to lower their cash rental payments in 2021 as a result of COVID-19. Mintert suggested this could lead to downward pressure on cash rental rates next year, according to the press release by Purdue University/CME Group.
Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer.
This month’s report includes insight into producers’ concerns over ethanol demand and expectations for farmland values.