These are grim times in farm country, according to a Purdue University poll: One-half of farmers say their farm’s financial condition is worse than a year ago and, for the third month, more than 70 percent said the trade war will reduce their net income this year. An equally large share of farmers expect hard times for the ag economy in the year ahead, according to the Ag Economy Barometer released on Tuesday.
“Concerns about the impact of trade conflicts with major agricultural trading partners, especially China, continue to reverberate through the U.S. production agriculture sector,” wrote Purdue economists James Mintert and Michael Langemeir. Adding to the dour outlook are low commodity prices that have accompanied forecasts of a record-large soybean crop and the second-largest corn crop ever.
The Ag Economy Barometer, a gauge of producer sentiment, is at its lowest reading, 114, since October 2016. The barometer fell by 15 points in September. The portion of producers who say their farm financial condition is worse than a year ago is rising rapidly; it was 36 percent in May and now is 54 percent. The portion who expect bad times in the next 12 months also is swelling; it was 46 percent in June and now is 69 percent.
“For the third month in row, 70 percent or more of farmers in our survey indicated that trade conflicts are expected to lower their farm’s net income in 2018” – and they expect larger reductions in income than a month ago, reported Purdue. Among the producers who expect lower income, 72 percent—a group that amounts to half of all farmers—expect a decline of more than 10 percent, compared to 66 percent a month earlier.
Producers found little comfort from USDA announcement of the details of its $6.2 billion in Trump tariff payments, with the chance of a second round of payments in December. Asked if the aid package allayed their concern of the impact of tariffs on their income, 45 percent answered “somewhat.” Last month, 43 percent chose “somewhat,” 4 percent selected “completely” and 47 percent said “not at all,” with 7 percent “uncertain.”
Purdue conducted the monthly survey for the barometer before the White House announced successful conclusion of a new North American trade agreement. The White House says the pact will bring new opportunities to sell wheat, poultry and dairy products in Canada, while allowing additional U.S. access for dairy, peanuts, processed peanut products and a limited amount of sugar and sugar-containing products. Canada and Mexico are the two largest customers for U.S. farm exports.
President Trump said tariffs would remain in place on steel and aluminum imports from the U.S. neighbors. Canada and Mexico put tariffs on an array of U.S. products, including farm exports, in retaliation for those tariffs.