Farmers’ outlook on the agriculture economy improved in December on a boost in farm income provided by the ongoing rally in crop prices. But their concerns over policies affecting agriculture grew.
The latest Purdue/CME Group Ag Barometer rose to a reading of 174, up 7 points from the 167 in November and up significantly from 96 in April 2020.
“The rise in the Ag Economy Barometer was primarily attributable to an improvement in the current conditions index, which rose 15 points compared to November,” said Jim Mintert, director of the Purdue Center for Commercial Agriculture.
The index of future expectation also rose but only by 5 points compared with November, he said in a virtual presentation of the December survey results.
The survey also showed producers were noticeably more inclined to think now is a good time to make large investment in their farming operations than in November.
“The farm capital investment index rose to a record high of 93, compared to a reading of 80 a month earlier. And of course that is dramatically higher than it was in April,” he said.
That reading in April 2020 was 38, a 34-point fall from the previous December.
The survey also asked farmers about their plans for farm machinery purchases in the coming year.
“Farmers indicated they were a bit more optimistic than earlier, especially compared to last spring,” he said.
In December, 15% of respondents planned to increase those purchases compared with only 4% in May, he said.
Farmers were also hopeful when it came to farmland values.
“Farmers were markedly more optimistic about farmland values on the December survey than they were earlier in the year,” he said.
A record 65% of respondents said they expect to see higher farmland values five years from now, he said.
Farmers were also more optimistic about cash rental rates than earlier in the year, with 18% expecting rates to rise in 2021 compared with 2020. Just 5% expected rates to decline.
“That is markedly lower than what we saw back in August when 17% of the farmers in the survey said they actually expected to see lower cash rental rates in 2021,” he said.
The survey continued to ask farmers whether the trade dispute with China would ultimately be resolved in a way that benefited U.S. agriculture.
In early 2020, roughly 80% of respondents said it would. In December, that sentiment was down to 47%, he said.
The survey has also been asking farmers about policies affecting agriculture and their expectation for the next five years.
“Compared to October, farmers — in both November and December — have been telling us that they expect to see more restrictive environmental regulations, higher estate taxes, higher income taxes, a weaker farm income safety net and reduced support for the ethanol industry,” he said.
The Ag Economy Barometer is based on a monthly survey of 400 agricultural producers consistent with U.S. Census data and targeting those who raise corn, soybeans, wheat, cotton, beef cattle, dairy and hogs.