The barometer fell to 126 in December, a two-point drop from November’s 128 and the second straight month of declines in producers’ sentiment toward the health of the agricultural economy. The barometer is based on a monthly survey of 400 agricultural producers from across the country.
The decline was driven by producers’ thoughts on the future, as measured by the Index of Future Expectations – one of the barometer’s two sub-indices. The Index of Future Expectations fell 7 points in December to 120. The index has fallen 15 points just since October.
“Two specific survey questions capture the recent erosion of producers’ forward-looking sentiment,” said James Minert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “The share of producers expecting ‘better’ financial positions for their farms fell to just 20% in December, while the share expecting ‘worse’ financial positions climbed to 30%. Both of these responses are the least optimistic levels in more than a year.”
A similar trend occurred regarding the overall agricultural economy. Sixty-three percent of respondents said they expect “bad times” over the next 12 months.
One bright spot in the December report is the Index of Current Conditions, which jumped 10 points to 139. That reading was supported by subtle changes in producers’ thoughts about large farm investments, Minert said.
“When asked if now is a good time to buy large investment items, such as buildings or machinery, 32% of respondents said it was,” he said. “That’s marked improvement from the just 21% of respondents who thought the timing was right for large investments back in August 2017. The August reading was a survey low, while the December reading is the second-highest.”
However, 62% of respondents still believe that now is a bad time for large farm investments.
Read the full December Ag Economy Barometer report at http://purdue.edu/agbarometer.