CHICAGO, ILLINOIS, US — US farmer sentiment remained relatively steady as farmers continue to see strong economic conditions on their farms, according to the Purdue University/CME Group Ag Economy Barometer. The index dropped 2 points from January to a reading of 165 in February.
The Ag Economy Barometer is based on responses from 400 US agricultural producers with this month’s survey conducted from Feb. 15-19, 2021.
The Index of Current Conditions remained near its all-time high at a reading of 200. Meanwhile, the Index of Future Expectations continued a four-month decline, down 20% from its October peak to a reading of 148.
“The ongoing strength in ag commodity prices and farm income continue to support producers’ perspective on current conditions,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “At the same time, concerns about possible policy changes affecting agriculture, and eroding confidence in future growth in ag trade, continue to weigh on producers’ future expectations.”
Producers are very bullish about farmland values. According to the survey, 51% of respondents in February said they expect farmland values to rise during the next year, up 8 points from the January survey. US farmers were also optimistic about the long-run trend in farmland values, as 62% of respondents indicated farmland values are likely to rise over the next five years.
The percentage of farms expecting better financial performance in 2021 compared to 2020 also have been on the rise since last summer and on the February survey reached 37%, up 4 percentage points from January and 25 points higher than last July. Respondents also said the most critical risk facing their operation, 29% ranked production, up from 21% in February 2020, and 18% ranked financial risk, down from 26% a year ago.
The survey also queried about on farm growth plans. This winter:
- Fifty percent of commercial-scale farms reported that they either have no plans to grow or plan to exit/retire in the next five years
- Seventeen percent expect their farm operation to grow at a rate of less than 5% annually
- Twenty-five percent expect their operation to grow 5% to 10% annually
- Nine percent expect their farm to grow more than 10% per year.
Overall, Mintert said, these results point toward continued consolidation in the farm sector.
Despite optimism for current farm situations, confidence in the future declines. The 20% decline in the Index of Future Expectations that has taken place since October has been buoyed by concerns about the long-term future for agricultural trade and uncertainty about policies affecting agriculture.
According to the survey, in February, only 45% of farmers expected ag exports to increase over the next five years, down from 65% in October. The percentage expecting a favorable outcome to the US trade dispute with China is also down, 37% in February compared with 65% in October.
“Even though we have seen a recent ‘ramp-up’ in ag exports to China, producers remain worried about the future of ag trade,” said Michael Langemeier, associate director of the Center for Commercial Agriculture. “They are also concerned about the possibility of more restrictive environmental regulations as well as higher estate and income taxes, all expressed on previous barometer surveys. Uncertainty about all these factors appears to be the motivation for the divergence between farmers’ perspective on the current versus the future situation.”