WEST LAFAYETTE, INDIANA, U.S. — While U.S. ag producers’ sentiment increased in August, it is still well below late spring readings of 141 and 143, according to the latest Purdue University/CME Group Ag Economy Barometer.
The barometer, which is based on a monthly survey of 400 agricultural producers from across the country, had an August reading of 129, 12 points higher than July.
“Farmer sentiment has improved over the past month, but producers are uncertain about the aid package’s ability to offset income losses on their farm,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
Before the August survey, the U.S. Department of Agriculture (USDA) announced plans to aid farmers affected by tariffs on a variety of U.S. ag products. Survey responses were collected after the general announcement, but before additional details were given on Aug. 27.
Producer’s perception of current conditions improved as the Index of Current Conditions increased to a reading of 121 following a dip to 99 in July. The Index of Future Expectations also rose in August but the increase was modest, rising to 132 just 6 points above its July reading.
After jumping 10 points in July, the percentage of producers expecting lower farmland values in the upcoming year improved slightly to 29% vs. 31% a month earlier. At the same time, the percentage of producers expecting higher farmland prices declined to 14% from 15%.
When asked for their perspective about farmland values five years from now, the percentage of producers expecting higher prices declined from 47% in July to 42% in August. However, the percentage of respondents expecting lower prices also declined, falling 3 points to 14%.
U.S. ag producers are still concerned about a trade war, but they were somewhat less concerned in August than they were in July. In August, 51% of respondents thought a trade war was likely to reduce U.S. ag exports, down from 54% in July. And the percentage that thought a trade war was unlikely increased to 28% in August compared to 23% that felt that way in July.
The percentage of producers that feel trade conflicts will reduce their farm’s net income, 71%, was virtually unchanged in August from July, according to the barometer.
However, among those expecting an income loss the percentage income reduction they think likely shifted from July to August. In July, 35% of respondents expecting an income decline said they believed an income reduction of more than 20% was likely. In August, that percentage fell to 26% of respondents.
Combining the percentage of respondents expecting 1) an income decline of up 10% and 2) those expecting a reduction of 10% to 20% indicates that, overall, producers’ concern about a trade conflict related income decline moderated from July to August.
Survey respondents also were asked, “To what degree does President Trump’s $12 billion relief plan for U.S. farmers relieve your concerns about the impact of tariffs on your farm’s income?” Choices provided to respondents were 1) Completely, 2) Somewhat, 3) Not at all, and 4) Uncertain.
The most common response was “Not at all,” chosen by 47% of respondents, followed by “Somewhat,” chosen by 43% of respondents. Just 4% of respondents chose “Completely,” and 7% of respondents said they were “Uncertain.”