CHICAGO, ILLINOIS, US — The US Ag Economy Barometer rose in March to 177, the highest reading for the barometer since the record-high reading of 184 in October. The 12-point rise in the barometer was attributable almost entirely to ag producers’ more optimistic view of the future as the Index of Future Expectations climbed to 164, 16 points above February’s index.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This month’s survey was conducted from March 22-26.
“Although the Index of Current Conditions, at 202, changed little from a month earlier when it stood at 200, it did mark a return to the index’s record high, first reached in December,” said Jim Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Strong ag commodity prices and improved farm financial conditions continue to support the Ag Economy Barometer readings as we head into spring.”
The Farm Capital Investment Index was unchanged from a month earlier at a reading of 88, remaining just 5 points below its all-time high of 93.
“What a difference a year can make,” Minert said. “A year ago, farmers’ confidence in the ag economy was plummeting and the investment index stood at just 54. This month’s investment index is 63% higher than it was in March 2020.”
Producers’ perspective on their farms’ financial position continues to improve, which appears to be fueling some of the short-term optimism about farmland values and capital investments, the report said. The Farm Financial Performance Index is based on responses to a question that asks producers “As of today, do you expect your farm’s financial performance to be better than, worse than, or about the same as last year?” The index bottomed out in April 2020, at a reading of 55, and then started to climb during the summer reaching a December reading of 116. Since December, the index has increased each month and, in March, hit a record high 125, up from 121 a month earlier and 8% higher than in December.
Although producers became more optimistic about the future this month, as indicated by the rise in the Index of Future Expectations, they were not more optimistic concerning trade with China. The percentage of producers who expect the US trade dispute with China to ultimately be resolved in a way that’s beneficial to US agriculture peaked in early 2020 at 81%. That percentage has been declining since that time and fell again this month to just 31%, down 7 points from February.
The decline in optimism about the outcome of the trade dispute mirrors producers’ concerns about China fulfilling its phase one trade agreement with the United States. In October, 59% of producers said they expected China to fulfill its phase one obligations, but that percentage has been declining continuously since last fall. In the March survey it declined again with only 35% of producers expecting China to fulfill the phase one agreement.