Ag Producers Indicate Greater Willingness to Make Big Purchases
The Purdue University/CME Group Ag Economy Barometer made significant gains from December to January. The barometer, which is based on 400 survey responses from agricultural producers across the country, rebounded to a reading of 143 in January. That is a 16-point improvement compared to December.
Over the past few months, producers have been slowly expressing a more favorable view toward investing in farm operations, with the index climbing 11 points from December and up 20 points from September, when the index bottomed out. The survey asks whether farmers believe now is a “good time” or “bad time” to make large investments.
“This survey provided us with the first opportunity to measure farmers’ sentiment following the announcement of USDA’s second round of Market Facilitation Program payments and the passage of the 2018 Farm Bill,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “It appears that these two announcements provided a significant boost to producer sentiment regarding both current and future economic conditions.”
In January, both of the barometer’s two sub-indices saw an uptick compared to December. Producers reported feeling better about both current conditions and the future.
“These numbers reflect what we heard last week at the National Farm Machinery Show in Louisville, from the folks manning the exhibits and the folks walking the show,” said Executive Vice President Vernon Schmidt. “There is a general sense that things are pointed in the right direction, and better days are ahead.”
The survey also asked farmers who planted soybeans in 2018 about their plans for 2019. Two-thirds of respondents said their soybean acreage will be the same as in 2018, but 25 percent of soybean producers said they intend to reduce their soybean acreage in 2019.
Looking specifically at farmers who plan to reduce their soybean acreage in 2019, 58 percent of them said they will reduce acreage by more than 10 percent, while 42 percent said they would reduce acreage by 10 percent or less.
The Ag Economy Barometer is considered a comprehensive measure of the health of the agriculture economy. It is the result of a collaboration between Purdue University’s Center for Commerical Agriculture and the CME Group.