WEST LAFAYETTE, Ind. — Increased exports have helped the farm industry grow over the last decade. But agricultural producers are worried disputes with trading partners such as China and Mexico could jeopardize future gains.
Likely spurred at least partially by those concerns, the latest Purdue University/CME Group Ag Economy Barometer, released on Jan. 8, dipped 7 points, from 134 in November to 127 in December.
The analysis is made by surveying 400 ag producers across the nation near the middle of every month.
“That 127 reading puts us back to about where the barometer was a year earlier,” said Jim Mintert, the barometer’s principal investigator and director of Purdue’s Center for Commercial Agriculture.
Both sub-indices, the Index of Future Expectations and the Index of Current Conditions, declined from the previous month, from 143 to 135 and from 115 to 109, respectively.
“If you look at those two lines on your chart there for a little longer, you realize that there’s a difference between those two. The Index of Current Conditions is substantially below where it was this time last year, whereas the Index of Future Expectations is actually pretty close to where it was this time last year,” Mintert said.
“So, producers are concerned about current conditions on their farm operations, but remain relatively optimistic about the long-term future with respect to their operations.”
On A Budget
Measuring the advisability of making large investments on farm operations, the Large Farm Investment Index value fell from 56 in November to 51 in December.
While that still is above the all-time low of 42 set late last summer, it is well below the value of 70 a year ago, indicating producers still are cautious about longer-term investments.
“Given the uncertainty about agricultural trade and the importance of agricultural exports to the U.S. ag economy, we continue to ask questions about people’s perspective on exports over the next five years,” Mintert said.
“Fewer people expected an increase in ag exports over the next five years and, importantly, a larger percentage, a move from 10 percent to 26 percent of the respondents, actually expect ag exports to decline over the next five years.
“So, that probably explains some of the concern people have with respect to making longer-term investments in their farm operations.”
Another consideration from a longer-term perspective is whether now is a good time to have another generation join a family farming enterprise. That question has been asked each of the last three years.
“In prior years, it was pretty much evenly split between whether or not now is a good time or a bad time. This year, we saw a deterioration — a larger percentage, 58 percent of the respondents, indicated that now is not a good time to bring a new generation to their family’s farming operation, whereas 42 percent said yes,” Mintert said.
“So, a deviation from prior years, a more negative perspective on that relative to prior years.”
But there still was some optimism.
“When we asked the same question and asked people to look five years ahead into the future, we also saw a shift. People are more optimistic about the future and the likelihood of that being a good time to bring a new generation to a farming operation than they were about the shorter-term prospects,” Mintert said.
In The Air
This month’s report also includes information about expectations for livestock production and drone technology.
An overwhelming percentage of respondents — 83 percent — expect to see the dairy herd contract in 2019. Just 17 percent expect some expansion to take place.
The responses were more mixed when quizzed about beef. But, compared to last year, more people expect the beef herd to contract and fewer expect it to expand.
Asked if a drone has been used on their farm in the last year, 66 percent said no and 34 percent said yes — in spite of the fact that only 13 percent reported they owned a drone.
“So, that indicates a lot of drone usage is taking place from service providers,” Mintert said.
Only 36 percent of respondents said a member of their own farm’s staff used the drone. Nearly two-thirds said it was a service provider doing that for them.
Drones were used for a variety of tasks, but far above and beyond for field scouting.
“That was not a surprise. But the mixture across the other responses — whether it be inspecting farm structures, field mapping or using it for photos or video promotional items — was somewhat surprising to us,” Mintert said.
Questioned if they plan to purchase a drone or unmanned aerial vehicle in 2019, the response was a resounding no.
“Just 6 percent of the respondents said they planned to purchase drones in the upcoming year, indicating that if drone usage is going to expand, it’s probably going to expand as a result of service providers providing more services that involve the use of a drone as opposed to individual farms perhaps purchasing their own drones,” Mintert said.
The next barometer is scheduled to be released on Feb. 5. Get more details and see all the charts at: www.purdue.edu/agbarometer.