CHICAGO, ILLINOIS, US — While producers are becoming more optimistic about the future, the Purdue University/CME Group Ag Economy Barometer only increased one point in April 2021 to a reading of 178 compared to March 2021.
The Ag Economy Barometer is calculated each month from 400 US agricultural producers’ responses to a telephone survey. This month’s survey was conducted April 19-23.
The Index of Future Expectations continued its upward trend from last month, up 5 points to a reading of 169. Meanwhile, producer views on current conditions fell.
“The strength in commodity prices continues to drive improving expectations for strong financial performance, even as many are seeing rising input costs,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
The Farm Financial Performance Index hit a record high in April, up 13 points from March to a reading of 138, 83 points higher than one year ago. According to the survey, 50% of the producers expect better financial performance in 2021 compared to 2020, up from 39% who felt that way in March. Even with an improved outlook in April producers are less inclined to think now is a good time for large agriculture investments compared to March.
“The divergence between the two responses could be reflective of the run-up in building costs and difficulty in scheduling construction projects across the US,” Mintert said.
Possible US tax policy changes does have some producers concerned about the possibility of passing their farms to the next generation. According to the survey, 87% expect capital gains rates to rise over the next five years. Three-fourths said they are “very concerned” about the possible elimination of the step-up in cost basis for farmland in inherited estates and 68% of respondents said they are “very concerned” about a possible reduction in the estate tax exemption for inherited estates.
Another inquiry the survey tackled was producer plans concerning the COVID-19 vaccination. The percentage of producers saying “they do not plan to get vaccinated” declined from a high of 37% in October to 28% in January and has fluctuated between 28% to 32% since that time.
As more in-person events such as ag field days, workshops and educational events are scheduled for 2021 the survey received a mixed response on whether producers are more or less likely to attend these types of events compared to in 2020. According to the recent April and March surveys, about 70% of respondents said they are more likely to attend in-person events this year, but 28% to 35% of producers said they are less likely to attend in-person events.
This could lead to a trend of ag programs being offered in a hybrid format of virtual or in-person to encompass the entire commercial ag producer industry.