Coronavirus pummels farmer confidence for second month

A majority of large farmers and ranchers expect worse financial performance on their farms this year than in 2019, nearly twice as many as before the coronavirus became pandemic and mitigation efforts sparked an economic slowdown, said a Purdue University poll released on Tuesday. Purdue’s Ag Economy barometer, a monthly gauge of farmer confidence, fell sharply for the second month in a row, to its lowest reading since October 2016.

“Farmers’ pessimism was motivated, in part, by concerns about the impact coronavirus is having on their farms’ profitability and their farming operations,'” said Purdue. Two-thirds of the producers taking part in the survey, conducted from April 19-24, said they were “fairly” or “very” worried about the impact on their farm’s profitability.

“Underpinning the rise in pessimism among farmers was a precipitous drop in principal commodity prices over the last couple of months,” wrote economists James Mintert and Michael Langemeier, who oversee the monthly barometer. From early March through late April, corn futures prices fell by 15 percent, soybeans by 8 percent, hogs by 33 percent and cattle by 21 percent.

Some 55 percent of producers said they expected poorer financial performance this year than last. When Purdue asked the question in December, only 30 percent expected worse times in 2020. In March, as the coronavirus began to disrupt the economy, the figure rose to 40 percent.

When asked their top concern about the Covid-19 situation, 42 percent said market access, 37 percent chose “financial” and 13 percent selected “health and safety.” By a 2-to-1 margin, producers said they have not changed operations in response to the coronavirus.

The barometer reached a record reading of 168 in February, soon after China and the United States de-escalated a trade war that damaged farm exports, and fell by 43 percent in the following two months, to a reading of 96.

For the barometer, Purdue surveys 400 crop and livestock operators with production or more than $500,000 a year. Poll results have a margin of error of 5 percent.

The Ag Economy Barometer is available here.