For the second month in a row the Purdue University- CME Group Ag Economy Barometer dropped sharply, falling 25 points in April to a reading of 96.
This marks the first time the barometer has fallen below 100 since October 2016, effectively wiping out all of the improvement in farmer sentiment that took place following the 2016 election, James Mintert and Michael Langemeier with the Purdue Center for Commercial Agriculture said in a university news release.
April’s decline leaves the Ag Economy Barometer 72 points below its record high, which was just established in February of this year.
The Ag Economy Barometer is generated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from April 19-24.
Declines in both the Index of Current Conditions and the Index of Future Expectations drove the barometer lower this month with the largest decline occurring in producers’ perceptions about their current situation. The Index of Current Conditions declined 39 points in April, to a reading of 72, while the Index of Future Expectations fell 18 points to a reading of 108.
Farmers indicated that, in the current environment, they are reluctant to make large capital investments in their farming operations. The Farm Capital Investment Index fell 16 points in April to a reading of 38, which was 34 points below its most recent high set in February of this year.
April’s investment index stood at a level nearly equal to last year’s low of 37, set in May, when farmers were suffering from a combination of severe spring planting delays and low commodity prices.
Farmers’ pessimism was motivated, in part, by concerns about the impact coronavirus is having on their farms’ profitability and their farming operations.
Two-thirds of farmers in this month’s survey said they were very worried (39%) or fairly worried (28%) about the impact of coronavirus on their farms’ profitability this year. Over half (54%) of the farmers responding said they anticipate applying for one of the federal government’s COVID-19 related financial assistance programs.
When asked what their No. 1 concern is regarding their farm and COVID-19, 42% of respondents said they were concerned about their farm’s market access, and 37% said their No. 1 concern was financial.
Just 13% of producers said their No. 1 concern regarding their farm was health and safety. However, 35% of this month’s respondents said they have implemented changes in how they operate their farm in response to concerns about COVID-19.
Underpinning the rise in pessimism among farmers was a precipitous decline in principal commodity prices over the last couple of months.
When asked to compare their farms’ expected financial performance in 2020 to 2019, 55% of respondents in the April survey said they expected worse financial performance in 2020 than in 2019, which compares to 40 and 30% of respondents who felt that way when surveyed in March 2020 and December 2019, respectively.