Income concerns take farmer sentiment to 8-year low
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Agriculture producers across the country continue to worry about the prospects for income on their farms, according to the latest Purdue University/CME Group Ag Economy Barometer.
The barometer is calculated monthly from a telephone survey of 400 agricultural producers across the country. Purdue says the decline in farmer sentiment can be attributed to lower income expectations among producers, as well as concerns over the future of agricultural trade and how the upcoming election could affect their farm operations.
The barometer fell 12 points to a reading of 88 in September, which James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture, said was the lowest level since March 2016.
“That was the early stages of a pretty significant downturn in the U. S. farm economy,” Mintert said. “So, that tells me producers are pretty concerned about economic conditions on their farms and for the ag economy right now.”
The survey was conducted from Sept. 9-13. One-third of respondents cited lower crop and livestock prices as their primary concern, while another third said higher input costs were top of mind for them.
“Since we started asking this question, that’s been the number one concern all along—high input cost,” said Mintert. “Now we’re at a point where lower crop and livestock prices are just as big a concern as high input cost. To me, that’s just the classic [scenario] where people are worried about a cost price squeeze.”
Farmers’ concerns about commodity prices were backed up by lack of confidence in the future of U.S. agricultural exports, Purdue said. Only 26% of respondents reported that they expect exports to rise over the next five years.
Two of the barometer’s main sub-indices also saw decreases last month. The Index of Current Conditions dropped seven points to 76, and the Index of Future Expectations at 94 was 14 points lower than a month earlier.
However, Mintert said fewer producers are expressing worry about high interest rates, particularly with the recent rate cut by the Federal Reserve.
“This month, that’s down to 17%, and I think that’s a reflection of the fact that we still have lingering high rates in the ag sector compared to where they were a few years ago,” he said.
Additionally, the Farm Financial Performance index fell for the third consecutive month. You can connect to the full results of the survey by clicking here.
Mintert and Michael Langemeier from the Center for Commercial Agriculture discussed the latest survey in the Purdue Commercial AgCast: