The Purdue University/CME Group Ag Economy Barometer weakened significantly in August to a reading of 124, down 29 points from July. The barometer, which is based on a mid-month survey of 400 agricultural producers across the U.S., was conducted from Aug. 12-20, with nearly all of the responses collected following the U.S. Department of Agriculture’s release of the Aug. 12 “Crop Production” report.
Farmers’ expectations for both current and future economic conditions also took a tumble, results showed. The Index of Current Conditions dropped 19 points, and the Index of Future Expectations dropped 34 points in August compared to a month earlier.
“Sharp declines in most commodity prices during July and early August weighed heavily on farmer sentiment this month,” said James Mintert, the barometer’s principal investigator and director of the Purdue University Center for Commercial Agriculture. “While USDA’s announcement of the Market Facilitation Program (MFP) payment rates did help alleviate concerns about 2019 income for many famers, the big decline in the Index of Future Expectations indicates farmers are becoming more concerned about the future for U.S. agriculture and their farms.”
In late July, USDA announced the payment rates per planted acre by county for the 2019 MFP, with payments to be made in three tranches. To learn farmers’ views on the MFP payments, two questions were included on the August survey:
1. To what degree do $16 billion in MFP payments to U.S. farmers relieve their concerns about the impact of tariffs on their 2019 farm income?
2. In a follow-up question: Do respondents expect USDA to provide payments to U.S. farmers for the 2020 crop year?
More than two-thirds (71%) of respondents said they feel that the 2019 MFP program will either “completely or somewhat relieve” their concerns about the impact of trade tariffs on 2019 farm income, but at the same time, nearly three out of 10 respondents (29%) said “not at all,” indicating that a minority of farmers feel that the MFP payments fall short of making up for income losses attributable to the ongoing tariff battles.
When looking ahead to 2020, 58% of farmers in the August survey said they expect another MFP payment to be made to U.S. farmers for the 2020 crop year, suggesting that a majority of farmers are counting on payments from USDA to help make up future income shortfalls.
Since March 2019, questions were added to the survey to assess farmers’ perspectives on how quickly they expect the soybean trade dispute with China to be resolved and whether the resolution will benefit U.S. agriculture. During that time, farmers were almost evenly spit on this issue, with 55% indicating that it was unlikely and 45% saying it was likely to be resolved quickly.
In subsequent months, the percentage of farmers saying they think it is unlikely that the trade dispute will be resolved soon increased, ranging from a high of 80% in May to a low of 68% in June.
In August, there was a modest sentiment shift as the percentage of producers expecting a resolution soon rose to 29% versus 22% in July and the percentage of producers who saw it as unlikely declined to 71% from 78% in July.
When farmers were asked whether they think the trade dispute will ultimately be resolved in a way that benefits U.S. agriculture, the results have been mixed over time. In March, more than three-fourths (77%) of farmers surveyed said they expect a beneficial outcome to the trade dispute, but that percentage declined to 65% in May before rebounding to 78% in July. In August, despite the decline, the percentage of farmers who expect a positive outcome slipped to 72%.
Read the full August Ag Economy Barometer report at https://purdue.ag/agbarometer.