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Ag Economy Barometer stable, but farmers less optimistic

Number of farmers still worried about impact of COVID-19 on operations steadily declining.

Farmer sentiment was virtually unchanged in July in comparison to a month earlier, according to the latest Purdue University/CME Group Ag Economy Barometer, which is based on responses from 400 U.S. agricultural producers. The index rose just one point from June to a reading of 118, which is still 30% lower than in February before the pandemic began.

Although there was little change in the July barometer, producers' perspective on current versus future conditions shifted. The Index of Current Conditions rose 12 points from June to a reading of 111, and the Index of Future Expectations fell five points to a reading of 121.

Unchanged from June but nine points lower than in May, 56% of producers reported that they plan to reduce their farm machinery purchases versus a year ago, while 38% of producers plan to keep machinery purchases about the same as last year, which was also unchanged from June but seven points higher than in May. The Farm Capital Investment Index was also unchanged from June, standing at a reading of 60, but noticeably stronger than May's index reading of 50.

Purdue University/ CME Group8.20 barometer.jpg

"Although overall farmer sentiment in July did not change much compared to June, sentiment was still much weaker than in February before the impact of coronavirus hit," said James Mintert, the barometer's principal investigator and director of Purdue University's Center for Commercial Agriculture. "In July, farmers indicated they were a bit less concerned about the current economic situation on their farms than earlier this spring, but they are less optimistic about the future, perhaps as a result of the recent resurgence in COVID-19 cases. Still, two-thirds of producers responding to this month's survey said they believe Congress should provide additional economic assistance to farmers in 2020 to help offset the pandemic's impact on agriculture."

Although a clear majority of farmers responding to the July survey were still worried about coronavirus affecting their farm’s profitability in 2020, the percentage of farmers who were either “fairly worried” or “very worried” has been declining since March. For example, in March, 74% of respondents expressed concern about the impact of COVID-19 on their farm’s profitability, whereas in July, that percentage had fallen to 61%.

More than half of farmers responding to the July survey said they were less likely to attend in-person educational events in 2020 as a result of COVID-19 concerns. When asked what their top information source would be in lieu of attending in-person events, 36% chose farm magazines, 19% chose online webinars, 17% chose farm radio and 17% chose websites. Direct emails and podcasts were far less popular as a top information source, with just 8% and 3% of producers choosing these options, respectively. 

When asked about the short-term outlook for land values, farmers' perspective improved, with 16% saying they expect farmland values to rise over the next 12 months, compared to 10% expecting this result in June. However, when asked about farmland values in five years, farmers were somewhat less optimistic than they were in June, with 48% saying they expect values to rise over the next five years, compared to 55% in the previous survey.

Read the full Ag Economy Barometer report at https://purdue.ag/agbarometer.

TAGS: Business
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