WEST LAFAYETTE, Ind. — In a June survey of 400 U.S. farmers conducted by Purdue University’s Center for Commercial Agriculture (CCA) and the CME Group, producers indicated the financial situation of their farm operations are stronger than a year ago.

 

The survey contributes to the Ag Economy Barometer, a producer-based index. June’s ag barometer reading of 131 has been mostly unchanged for the past three months and is well above levels prior to 2016. In June 2016, only 3 percent of survey respondents felt their financial situations were better than the prior year.

Now, 13 percent of respondents believe their farms are better off than 2016, said David Widmar, senior research associateat Purdue’s CCA.

“This project allows us to formally capture and regularly report producer sentiment,” Widmar said. “In addition to measuring sentiment, the Ag Economy Barometer survey also asks questions about key farm economy drivers, which provides us with insights on what is contributing to the changes in sentiment over time. The combination of a regular, monthly measurement of sentiment and the supplemental, key driver questions provides unique insights into what is going on in the farm economy.”

Stated plainly, a little more than half of producers surveyed in June said the financial situations on their farms were about the same as, or better than they were in 2016 – 54 percent the same as or better, and 46 percent worse.

CME Group representative Chris Grams said the Ag Economy Barometer helps monitor the health of the agricultural sector.

“At CME Group, our roots are in agriculture and we continue to help producers and agribusinesses manage risk today,” he said. “We believe the Purdue/ CME Group Ag Economy Barometer provides an essential resource for monitoring the health of this sector and vital insight into the global economy.”

Although the agriculture economy can vary widely depending on the industry, and sometimes producers of the same commodity can have differing levels of sentiment, Widmar said producer sentiment ratings give a broad view of the industry’s opportunities and challenges. The survey also has “economy driver” questions which can help make sense of the differences between commodity markets.

“The goal of this project is to provide a broad overview of the challenges and opportunities that agriculture producers face,” Widmar said. “One way we try to understand some of these difference is with the key farm economy driver questions – we ask about expectations for commodity prices across several commodities and ask about the long-run expectations of crop versus livestock agriculture.” Widmar believes farmers who read the results may also benefit more directly.

“Producers have told us they find other producers’ perspectives very insightful,” he said. “This is especially the case for those key farm economy driver questions.

We have asked producers about their expectations about commodity prices, farmland values, management strategies, and several other factors that provide many insights.”

The report said a shift in producer opinions to that of a more positive perspective has been a trend since 2015, and that it may be the result of several factors.

“The long-term shift in producers’ attitudes about their operations’ financialconditions is likely reflective of several factors,” Widmar said. First, revenues on many farms increased as a result of record, or near record, crop yields in 2016.

The revenue improvement was further supported by the fact that corn and soybean futures prices strengthened from late summer through early winter.

“Second, production costs moderated for most crop operations compared to the prior year. Fertilizer prices in particular were weaker than a year earlier, helping to improve margins. Third, as the long-term adjustment to tighter crop operating margins continues, farmland rental rates continue to adjust downward, helping to brighten the financial picture for many farm operations.”