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U.S. Farmers Remain Optimistic on Economy, Survey Shows
U.S. farmers see current ag economy conditions improvement and hold out greater hope for better future conditions.
The latest monthly results of the Purdue University/CME Group Ag Economy Barometer indicates the highest farmer optimism since January of 2017.
The May barometer reading of 141 was 16 points higher than April. The rise in the barometer, a sentiment index derived from a monthly survey of 400 agricultural producers across the U.S., was driven both by producers’ improved view of current conditions in the production agriculture sector and, especially, their more optimistic view of the future, according to a Purdue University press release Tuesday.
The Index of Current Conditions increased to 132 during May, 9 points higher than in April, while the Index of Future Expectations climbed to 145, 19 points higher than a month earlier, making it the highest future expectations reading since February 2017, the release stated.
Driving that optimism was a large improvement in producers’ expectations regarding the future for both the U.S. ag economy and their own farms’ financial condition, according to Jamest Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
"Over the last month, there’s been a relaxation in international trade tensions with China, and that seems to be playing a role in how producers are viewing their financial future," Mintert says.
The May results showed the largest one-month increase in the Index of Future Expectations since January 2017.
“This was in contrast to last month’s reading when, in the midst of deteriorating trade relations, there was a decline in sentiment toward the agricultural economy as a whole and with respect to producers’ own farming operations,” barometer officials stated in the press release.
Despite the improvement in sentiment, producers’ perspectives on making large investments on their farms changed very little with only 27% of producers saying now is a good time to make large farm investments, according to the press release.
The latest Ag Barometer also asked producers about the farm bill debates in Congress.
When asked whether the current 2014 version of the U.S. farm bill provided producers with a financial safety net, only 25% of respondents said it was effective, according to the Purdue University press release.
More specifically, when asked about the current ARC-County (Agricultural Risk Coverage) and PLC (Price Loss Coverage) income support programs included in the 2014 farm bill, only one quarter of the respondents said these programs were effective in providing a financial safety net, and nearly one third said they were not effective, according to the release.
When asked about crop insurance, an integral part of current farm bill discussions, nearly two thirds of producers considered the crop insurance program to be effective in providing a financial safety net.
Most U.S. farmers surveyed in May responded to a question on crop insurance subsidy changes by indicating that they would change either the insurance product they purchase or their coverage level. Meanwhile, just over a quarter of respondents said they would not purchase crop insurance next year if their cost increased by half, according to the press release.
For additional information about producer sentiment regarding Farm Bill legislation including crop insurance and subsidies, read the full May Ag Economy Barometer report at http://purdue.edu/agbarometer.