U.S. farmers like the way the ag economy is going, survey says
U.S. farmers continue to be optimistic about their sector’s economy, according to the September Purdue University-CME Group Ag Economy Barometer.
With a rating of 156, the barometer hit its highest reading since the pandemic began last winter and 12 points higher than one month earlier.
In September, producers were more optimistic about both current conditions and the future for agriculture than they were in August, according to the Purdue University-CME Group press release Tuesday.
The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from September 21-25, 2020.
The Purdue University-CME Group announcement made note that “The improvement in the barometer and its two primary subindices occurred against the backdrop of USDA’s September 18 announcement of the second round of Coronavirus Food Assistance Program (CFAP 2) payments for U.S. agricultural producers.”
The program provides up to $14 billion in additional assistance to agricultural producers determined to have suffered from market disruptions and costs because of COVID-19.
In addition, U.S. farmers witnessed fall crop prices rising.
“For example, in west-central Indiana cash corn prices rose nearly $0.20 per bushel from late August to late September, while cash soybean prices rose nearly $1 per bushel. The resulting revenue boost from these two sources likely provided much of the impetus for this month’s 18-point rise in the Index of Current Conditions and the 12-point rise in the Ag Economy Barometer,” survey officials stated in their press release.
U.S. farmers are becoming more confident in making large investments in their farming operations.
“The Farm Capital Investment Index rose again in September to a reading of 73, the highest reading of 2020. Helping to confirm the optimism evident in the investment index, fewer producers in September than in August and prior months, said they planned to reduce their machinery purchases compared with a year earlier,” Purdue University-CME Group survey officials stated.
And the optimism isn’t just about buying equipment but also farmland values.
For the upcoming year, more producers in September said they expect farmland values to rise than in August.
“The longer-run optimism about farmland values expressed in August continued in September as the percentage of producers expecting farmland values to rise over the next five years was unchanged at 59%, which is still the highest reading of this year,” survey officials stated in the release.
Although export sales to China have been rising in recent weeks, producers were, somewhat surprisingly, a bit less optimistic about future agricultural trade prospects in September than they were in August.
In September, 58% of respondents said they expect ag exports to increase over the next five years, down from 67% who felt that way in August.
“The shift occurred because more producers said they expected exports to remain about the same in the future, rather than increase,” survey officials stated.
In a related question, producers were asked whether they expect China to fulfill the food and agricultural import requirements established in the “phase one” trade agreement signed earlier this year.
Farmers’ opinions were split regarding “phase one’s” prospects with just less than half (47%) of respondents indicating they expect China to fulfill its commitment to import food and ag products from the U.S.