Wheat harvest

Wheat harvest near Waterville, Wash. A survey shows optimism among farmers has declined during the past month.

U.S. farmers and ranchers ended 2019 less optimistic about the health of the agricultural economy than they were in November, based on a national survey by Purdue University’s Center for Commercial Agriculture.

The index of producer sentiment measured by the Purdue/CME Ag Economy Barometer fell 7 points in December, showing deterioration in producers’ perception of current economic conditions on their farms combined with reduced optimism about the future.

The sub-index of current conditions dropped 6 points from November’s survey, and the sub-index of future expectations fell 8 points — dimming overall sentiment to about where it was in December 2017, Jim Mintert, director of the Purdue center, said in a podcast on Jan. 8.

But producers’ perception of current conditions was substantially below where it was a year ago, down 30 points, while the measure of future expectations increased 15 points year over year.

“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,” he said.

Producers’ sentiment about making large investments in their operations declined 5 points from November to December but was still 9 points above the all-time low in late summer. A drop of 19 points from December 2017, however, indicates producers are still cautious about making longer-term investments, he said.

Producers are less optimistic about agricultural exports over the next five years with fewer respondents, 59 percent, expecting an increase compared with 66 percent in November. The expectation for a decrease in those exports jumped from 10 percent in November to 26 percent in December.

“So that probably explains some of the concern people have with respect to making longer-term investments in their farm operations,” he said.

There was also deterioration in producers’ confidence in it being a good time to bring a new generation into the family farm operation. In the two previous years, the sentiment was evenly split between, but December’s survey showed 58 percent of respondents indicated now is not a good time to do that, he said.

That is a deviation from previous years, indicating a more negative perspective, he said.

However, there was also a shift in sentiment when producers were asked if five years from now would be a more favorable time to bring in a new generation. With 65 percent of respondents answering yes — compared with 44 percent a year ago and 38 percent two years ago — it indicates more producers are optimistic about the future, he said.

The survey also queried livestock producers about where they thought production was headed in the next 12 months.

“Of course there’s been a lot of negativity with respect to a lack of profitability and large losses accruing on large dairies,” he said.

An overwhelming percentage of respondents, 83 percent, expect to see the dairy herd contract in 2019. More people, 63 percent, expect a contraction in the beef herd than a year ago and fewer expect to see some expansion.

Expectations for increasing pork production were consistent with USDA’s December hogs and pig report indicating a 2 percent increase in the breeding herd.

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