WEST LAFAYETTE, Ind. — A nationwide survey of 400 farmers showed worries about the future of the agricultural economy.
According to the monthly Purdue/CME Group Ag Economy Barometer, producer sentiment levels reached 92, the lowest reading since March 2016 and the second-lowest value since data collection began last October.
“The barometer is an overall measure of sentiment regarding the health of the ag economy,” said Jim Mintert, director of Purdue’s Center for Commercial Agriculture. “We topped out back in July with a reading of 112. We’ve been on a downward path since then.
“This month’s reading was down significantly compared to last month and especially compared to this summer.”
Mintert attributed the pattern to declining commodity prices throughout the summer.
The barometer has two sub-indexes that give further insight into farmers’ opinions: the index of current conditions and the index of future expectations.
“The index of current conditions actually rose a little bit this month,” Mintert said.
“When we surveyed people, it was the third week of October. Many people were in the midst of harvest. For many locations, they were harvesting record or near-record yields. That probably provided some optimism about current conditions.”
Record yields, along with a slight bounce in commodity prices, gave farmers some optimism about the current market.
When it comes to the future outlook, however, the grass isn’t as green.
“You can see a rather large decline in the index of future expectations, and that’s really driving the downward trend in the entire barometer,” said Michael Langemeier, associate director of the center.
“When you look ahead to next year, to December 2017 future prices, they are well below $4. The long-term concerns about the ag economy are still there.”
The survey also asked farmers whether they expect widespread good or bad times in the crop and livestock sectors.
“Consistently, since we started collecting data, people have been more optimistic about the livestock side than the crop side,” Mintert said. “But not this month.”
Due to falling swine and calf prices, farmers are worried about the livestock industry.
“One of the things that took place, especially in the beef cattle sector, was expansion went up more quickly than the industry expected,” Mintert said. “It lowered prices more quickly.
“I think the industry expected we’d ultimately see lower prices in response to increasing supply. But the supply showed up at least a year earlier than anyone was expecting. We’ve really changed the situation dramatically.”
Producers also indicated that they plan to change some of their production practices in 2017 in response to a challenging farm economy.
The most popular strategy reported by producers was lowering fertilizer rates, as 46 percent of respondents plan to employ lower rates in 2017.
Thirty-five percent of respondents plan to adjust the trait packages of their hybrid or seed varieties, while only 19 percent reported that they plan to lower seeding rates in 2017.
Survey responses indicate producers are making changes in their production practices in an attempt to reduce production costs as they continue to adjust to lower crop prices.