Farmer sentiment jumped to the highest level of the Trump presidency, with a nationwide survey finding farmers upbeat about the prospects for exports following the Phase I trade deal with China, according to the Purdue/CME Group Ag Economy Barometer released Tuesday.
The Ag Economy Barometer survey, which is based on responses from a nationwide survey of 400 agricultural producers, was conducted from Jan. 13-17, 2020. The polling period coincided with the Jan. 15 signing of the Sino-U.S. trade deal, but it came before expectations that the coronavirus outbreak would constrain Chinese demand.
White House economic adviser Larry Kudlow dialed back expectations about China’s economy Tuesday. “The export boom from that trade deal will take longer because of the Chinese virus,” he told Fox Business News. China agreed to increase purchases of U.S. manufacturing, energy, and agricultural goods and services by at least $200 billion over two years, but the deal did not spell out which goods and services China would buy.
The January survey found that farmers have “become noticeably more optimistic about the future of agricultural trade over the last several months,” pushing the index to 167 from 150 in December.
In October, just 55 percent of farmers expected U.S. ag exports to increase over the next 5 years. By January, that figure was above 70 percent. Only 4 percent were pessimistic about the ag export outlook, compared with 10-12 percent who in the summer of 2019 said they expected exports to decline.
“Producers increase in optimism about the future was not enough to push the Farm Capital Investment Index up,” the survey found. “Although the investment index fell 4 points below December’s reading in January, it remained strong compared to late summer and early fall.”
Despite the upbeat trade picture, the survey also found that 44 percent of farmers had no plans to increase operations. That was up from 38 percent a year ago and 28 percent two years ago, pointing to an increasing rates of stagnation after an extremely tough year in the farm economy.
At the same time, 56 percent of all farms had no plans to grow or were planning to exit/retire. That’s up from 50 percent last year and 39 percent two years ago, showing that more farmers are thinking of getting out of the business.