Only four in 10 of the farmers polled for Purdue’s Ag Economy Barometer say they expect the U.S. economy to grow in the year ahead, down sharply from the post-election euphoria that drove the monthly barometer to a record high in January. “Additionally, uncertainty regarding the future of agricultural trade, which an overwhelming majority of producers regard as important, could also be a concern for farmers when they consider future prospects,” said the Purdue economists who run the barometer.
Optimism about economic growth crested at the start of this year, when 60 percent of respondents said they expected the economy to expand in the coming 12 months. The figure dropped to 50 percent in June and to 40 percent in the latest survey. Expectations shifted toward “remain about the same.” Thirteen percent said they expect a contraction, up from 9 percent in March and June.
Producers rated the North American Free Trade Agreement as good for U.S. agriculture, with 59 percent of respondents saying it was good vs. 41 percent who saw it as bad. However, 20 percent of survey participants declined to answer that question, or one about NAFTA’s effect on the country. “Although it is not possible to ascertain exactly why producers opted not to respond to these two questions, it could reflect a relatively high degree of uncertainty among respondents regarding NAFTA’s impact,” said the economists.
Earlier this year, producers overwhelmingly supported renegotiation of NAFTA and they solidly believed a new NAFTA would be favorable for the farm sector.
The Ag Barometer currently is 132. It has ranged from 130-139 over the last six months “and remains well below its peak level of 153 established in January,” said Purdue. Some 400 grain farmers and livestock producers are polled each month for the barometer.
USDA says farm income is nosing upward for the first time since 2013 but it remains far below the mark set during a six-year commodity boom that collapsed early this decade. Ag bankers are charging higher interest rates and setting longer repayment periods on farm loans in the face of rising, but still historically low, delinquency rates on farm loans, said the Federal Reserve at mid-summer.
“Persistent declines in farm income have likely slowed the volume of new, non-real-estate loans as bankers and borrowers have sought to manage risk,” it said. Since then, the Chicago and Kansas City regional Fed banks said there were signs that the agricultural sector was stabilizing.