In April, the Purdue University/CME Group Ag Economy Barometer recorded the fourth largest one-month drop since data collection began in October 2015. The barometer, which is a sentiment index based on a monthly survey of 400 agricultural producers across the U.S., declined 18 points to a reading of 115, down from 133 in March.
The 18-point decline in the index was the fourth largest one-month fall in the barometer since data collection began in October 2015. The barometer’s decline was driven by worsening perceptions of both current economic conditions and weaker expectations for the future as the Index of Current Conditions fell 21 points to a reading of 99 while the Index of Future Expectations declined 16 points to a reading of 123.
Producers’ negative sentiment was further borne out by their perspective on making large investments in their farming operations. The percentage of producers that viewed now as a good time to make large investments declined to 22% from 26% a month earlier, while the percentage that viewed now as a bad time to make large investments increased to 74% from 69% in March. When combined these responses pushed the Large Farm Investment Index to a reading of 48 in April, 9 points lower than in March and the fourth weakest reading of the investment index since fall 2015.
Farmers’ expectations for farmland prices in the upcoming 12-months also weakened in April as the percentage expecting higher values fell to 13% from 14% while the percentage expecting lower values increased to 28% from 25%.
The largest response category, those expecting farmland values to remain about the same, fell to 59% from 61%.
Although the one-month change in farmers’ perspective on farmland values was more modest than the decline in the investment index, it still stands in sharp contrast to the perception producers had of farmland values a year earlier. In April 2018, 18% of producers expected higher farmland values, while 64% expected values to remain about the same, and 18% expected values to decline, a notably more optimistic outlook than recorded in April 2019.
To gauge producers’ expectations for 2019, this month’s survey asked whether respondents expect their farms’ 2019 financial performance to be better than, worse than, or about the same as in 2018? Over half (56 percent) of farmers in the April survey said they expect their farms’ financial performance to be about the same as last year. However, 27% of farmers said they expect this year’s financial performance to be worse than last year. In comparison, when the same question was included in the April 2018 survey, just 19% of respondents expected worse financial performance for their farm than in the prior year.
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