For the second month in a row the Purdue University-CME Group Ag Economy Barometer dropped sharply, falling 25 points in April to a reading of 96.
Dramatic declines in commodity prices, combined with concerns about coronavirus impact on farm profitability, led to the largest one-month decline in the Index of Current Conditions in the history of the barometer survey.
Two-thirds of farmers participating in our April survey said they were either “fairly worried” or “very worried” about the coronavirus’ impact on the farms’ profitability this year.
The percentage of farmers expecting their farms’ profitability to decline in 2020 compared 2019 increased to 55 percent in April, compared to 40 percent in March, and just 30 percent who felt that way in December 2019.
Over half of this month’s survey respondents said they anticipate applying for a COVID-19 related financial assistance program.
Concerns about the economic outlook for their farms led fewer farmers to think now is a good time to make large investments in their farming operation as the Farm Capital Investment Index fell 16 points compared to a month earlier.
This put the Farm Capital Investment Index near its lowest reading of 2019 which occurred in May amidst last year’s severe planting delays and low commodity prices.
Unsurprisingly, farmers’ near-term perspective on farmland values weakened, but their longer-run perspective on farmland values actually improved slightly suggesting that they view the current disruption in agriculture and food markets to be temporary and look for markets and farm profitability to rebound in the years ahead.
