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Ag barometer rises on crop prices, USDA payments

TAGS: Business
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Producers more optimistic about current conditions and future of agriculture than since start of pandemic.

Farmer sentiment hit a post-pandemic high in September, according to the Purdue University/CME Group Ag Economy Barometer, which is based on survey responses from 400 U.S. agricultural producers. The index rose to a reading of 156, up 12 points from August and up 60 points from its 2020 low in April. The Current Conditions Index also saw an uptick, jumping 18 points to a reading of 142 in September, and the Future Expectations Index rose nine points to a reading of 163.

This past month marked key changes in the agricultural economy. On Sept. 18, the U.S. Department of Agriculture announced a second round of Coronavirus Food Assistance Program payments for U.S. agricultural producers, and fall-harvested crop prices have continued to strengthen considerably since late summer.

"In September, producers were more optimistic about both current conditions and the future for agriculture than they've been since the pandemic began," said James Mintert, the barometer's principal investigator and director of Purdue's Center for Commercial Agriculture. "A continued crop price rally and the announcement of USDA's Coronavirus Food Assistance Program payments appear to be fueling much of their optimism."

However, that optimism did not completely carry over into perspectives toward the future of U.S. agriculture's trade prospects. In September, 58% of respondents said they expect agricultural exports to increase over the next five years, down from 67% who felt that way in August. The shift was primarily due to more producers indicating that they expect exports to remain about the same in the future rather than increase. 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 with the U.S. signed earlier this year. Farmers' opinions were split, with less than half (47%) of respondents indicating that they expect China to fulfill that commitment.

Given the increased attention in recent years, producers were asked several questions about their intentions to use fall cover crops. Nearly four out of 10 corn/soybean producers in the September survey said they intend to plant at least some cover crops this fall. As for acreage intentions, more than half (52%) said they plan to plant cover crops on one-third or less of their corn/soybean acreage, 21% intend to plant one-third to as much as two-thirds of their acreage and 27% intend to plant cover crops on more than two-thirds. Farmers who intend to plant cover crops this fall overwhelmingly (79%) said their primary reason for doing so is to improve soil health and crop yields, while just 1% of respondents said it's because of the availability of cost-share funds.

With many educational events and programs transitioning to online delivery, the September survey asked farmers whether they have attended an online program and, if so, what aspects they liked and disliked. Twenty-two percent of respondents said they had attended an online educational program or field day this year and reported that they liked the flexible timing of attending and viewing the programs (27%) and the ability to choose topics of interest (21%). However, respondents overwhelmingly pointed to the lack of interaction with other attendees (40%), poor broadband connection (18%) and difficulty in asking questions (17%) as the top reasons they disliked these programs.

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