CHICAGO, ILLINOIS and WEST LAFAYETTE, INDIANA, US — US farmer sentiment fell in November, as farmers had a more pessimistic view about the future of the agricultural economy, according to the Purdue University/CME Group Ag Economy Barometer. The index dropped 16 points from October to a reading of 167.
The Ag Economy Barometer is based on responses from 400 US agricultural producers with this month’s survey conducted from Nov. 9-30.
The Index of Current Conditions rose 9 points to a reading of 187, an all-time high for the index, attributed to on-going rally in commodity prices and second round of the Coronavirus Food Assistance Program (CFAP 2) payments, which continued to support producers’ view of the current economic situation. However, the Index of Future Expectations fell 30 points from October to a reading of 156 in November based on more pessimistic view of future agricultural economy.
“Producers were more pessimistic about future economic conditions on their farms in November than they were just a month earlier,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “This is the opposite of what happened following the November 2016 election. That year producers became much more optimistic about the future following the election and, in turn, that optimism about the future helped drive the ag economy barometer up sharply in late 2016 and early 2017.”
In order to get a better understanding of what might be influencing the shift in producers’ sentiment pre- and post-November election, a series of questions focused on producers’ future expectations for environmental regulations, taxes and other aspects of the agricultural economy, were included on both the October and November surveys.
According to the survey, in comparing the results from October to November, far more producers in November said they expect to see:
- environmental regulations impacting agriculture to tighten over the next five years;
- higher income tax rates for farms and ranches;
- higher estate tax rates for farms and ranches;
- less government support for the US ethanol industry and
- a weaker farm income safety net provided by US government program policies.
The trade outlook with China was also less optimistic. In January and February of this year 80% of those surveyed said they expected to see the trade dispute with China be resolved in a way that benefits US agriculture. But the November survey showed a different outlook, now only 50% of respondents believe a favorable outcome for US agriculture will occur.
In a related question, only 44% of respondents to the November survey said they think it is likely that China will fulfill the phase one trade agreement requirements, down from 59% a month earlier.
Read the full Ag Economy Barometer report on the Purdue University website.