Farmer Sentiment Pulls Back Post-election
Regulation, trade and taxes rated as top concerns; Index of Future Expectations falls 30 points in November.
The Purdue University/CME Group Ag Economy Barometer dropped 16 points to a reading of 167 in November, down from its all-time high set just one month ago. The decrease in sentiment was led by farmers’ more pessimistic view toward the future of the agricultural economy, with the Index of Future Expectations falling 30 points to a reading of 156 in November. The ongoing rally in commodity prices and Coronavirus Food Assistance Program 2 (CFAP-2) payments continued to support producers’ view of current economic conditions, as the Index of Current Conditions rose nine points in November to 187, an all-time high for the index.
“Producers were more pessimistic about future economic conditions on their farms in November than they were just a month earlier.”
The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses in a telephone survey. This survey was conducted Nov. 9-13, after the U.S. election.
“Producers were more pessimistic about future economic conditions on their farms in November than they were just a month earlier,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “This is the opposite of what happened following the November 2016 election. That year producers became much more optimistic about the future following the election and, in turn, that optimism about the future helped drive the Ag Economy Barometer up sharply in late 2016 and early 2017.”
Fig. 1: Farmer sentiment pulls back post-election as regulation, trade and taxes rated as top concerns  |
Fig. 2: Farmer expectations regarding changes in policies affecting U.S. agriculture in the next five years, October vs. November 2020  |
To learn more about what factors might be motivating the shift in producers’ sentiment pre- and post-November election, a series of questions focused on producers’ expectations for environmental regulations, taxes and other key aspects of the ag economy were included in both the October and November surveys. Comparing results from October to November, far more producers in November said they expect to see: 1) environmental regulations affecting agriculture to tighten during the next five years; 2) higher income-tax rates for farms and ranches; 3) higher estate-tax rates for farms and ranches; 4) less government support for the U.S. ethanol industry; and 5) a weaker farm-income safety net provided by U.S. government program policies.
Since the summer of 2019, Purdue researchers have been tracing producers’ perceptions regarding the ongoing trade dispute between the United States and China — specifically, whether they think the dispute will be resolved soon and whether the outcome will ultimately benefit U.S. agriculture. In January and February 2020, 80% of survey respondents said they expected to see the trade dispute with China be resolved in a way that benefits U.S. agriculture. However, on the November survey, the percentage of farmers expecting a favorable outcome for U.S. agriculture declined to 50%, the lowest percentage recorded since the question was first included on a barometer survey. In a related question, only 44% of respondents to the November survey said they think it’s likely that China will fulfill the Phase One Trade Agreement requirements, down from 59% a month earlier.
This report also asked farmers about their intentions of making large investments in their farming operations and their expectations for farmland values in the next 12 months and five years. The site also offers additional resources — such as past reports, charts and survey methodology — and a form to sign up for monthly barometer email updates and webinars.
Each month, the Purdue Center for Commercial Agriculture provides a short video analysis of the barometer results, and, for even more information, check out the Purdue Commercial AgCast podcast. It includes a detailed breakdown of each month’s barometer, in addition to a discussion of recent ag news that affects farmers. This is available at https://purdue.ag/agcast.
Read the full Ag Economy Barometer report.
Editor’s note: Kami Goodwin, is a communications and marketing manager for the Department of Agricultural Economics at Purdue University. Photos courtesy of Purdue/CME Group Ag Economy Barometer/James Mintert.
