Farmers slightly less optimistic about ag economy in December

WEST LAFAYETTE, Ind. — Farmers were slightly less optimistic about the economy in December compared to November, according to the latest reading of the Purdue University/CME Group Ag Economy Barometer.

“The Ag Economy Barometer index declined nine points this month to a reading of 136, but that left the index still 21 points higher than it was in October,” said James Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture.

“The decline in the index was mostly attributable to a decline in the Current Conditions Index, which fell 13 points compared to last month to a reading of just 100. That leaves that index five points higher than it was in October.”

The Index of Future Expectations dropped eight points to 153, leaving that index 59 points higher than in September and 29 points above the October reading.

Optimism about the future appears to be motivated by producers’ expectations for a more favorable policy environment in the years ahead — especially for environmental, estate and income tax policies.

“Leading up to the election, over 40% of producers anticipated more restrictive environmental regulations over the next five years,” the barometer report stated. “However, following the election, fewer than 10% expressed concerns about tighter regulations.

“Similarly, 40% of farmers expected estate taxes to rise before the election, but less than 10% foresee an increase in estate taxes within the next five years.”

Report Highlights

• The percentage of producers anticipating widespread good times in U.S. agriculture over the next five years increased to 57%, from 52% in November and 34% in October.

• When asked about financial conditions on their farms compared to a year ago, 57% of producers reported worse conditions in December, up from 51% in November.

• 51% of farmers expressed concern about the U.S. agricultural economy over the next 12 months, an increase from 40% in November.

• The Farm Capital Investment Index fell seven points to a reading of 48.

• A lower percentage of farmers believe it is a good time to invest, dropping to 17% from 22% in November.

• The proportion of producers who viewed it as a bad time to invest increased slightly to 69%, up from 67%.

• The Short-Term Farmland Value Expectations Index dropped five points to a reading of 110, following a similar five-point decrease the previous month.

• The Long-Term Farmland Value Expectations Index decreased by one point to 155.

• Four out of 10 farmers, or 43%, chose “trade policy” as the most important policy for their farm in the upcoming five years.

Learn more at ag.purdue.edu/commercialag/ageconomybarometer.