The newly created Ag Economy Barometer will provide a monthly gauge of the sentiment of large-scale farmers, who produce the bulk of U.S. food and fiber, say its sponsors, the Center for Commercial Agriculture at Purdue U and CME Group, which operates futures markets.
Some 400 large producers will be surveyed for the index with the Purdue center using its expertise “to measure producers’ expectations of key farm economy drivers such as farm profitability; farmland prices; capital expenditures; row crop, livestock and dairy prices; and seasonal drivers such as seed, fertilizer and feed ingredient prices,” says a Purdue release. In its debut, the barometer reported farmers were slightly more optimistic in April than in preceding months.
“It is important to keep the situation in perspective,” said David Widmar, lead researcher for the barometer, who described the index reading of 106 as an uptick in producer sentiment. “Overall, the general agricultural outlook is still difficult.” He said a strong majority of respondents said they expect “bad times” financially for the agricultural sector for the next year. A separate survey of “thought leaders” got the same result.
Purdue says the barometer will be the only monthly measure of the health of the agricultural economy that relies on farmers’ sentiments about current conditions and their expectations for the near future. It will be buttressed by a quarterly survey of 100 lenders, academics, consultants, commodity group and business leaders. There are other ongoing reports of the agricultural sector, including the quarterly Ag Finance Databook by the Kansas City Federal Reserve Bank, which is based on a survey of farm bankers, and Creighton University’s Rural Mainstreet Index, which is based on a survey of lenders in farm and energy-producing states.
The reference period for the barometer is the past fall and winter, a comparatively bleak time. Net farm income fell 38 percent during 2015 under the weight of lower crop and livestock prices. Following the end of a seven-year boom in 2013, commodity prices are forecast to run at lower levels for years to come. An upswing in futures prices and generally favorable weather during April “likely contributed to the improved sentiment,” said Purdue.