Decline in US sentiment over agribusiness future runs contrary to view of current conditions

By Aerin Einstein-Curtis

- Last updated on GMT

© iStock
© iStock
US agricultural producers are uneasy about the sector’s future, says an economist. 

For the second consecutive month the Ag Economy Barometer​ has slipped, said David Widmar, senior research associate for the Center for Commercial Agriculture at Purdue University.

The ag barometer, which records producer sentiment, saw a rapid rise from November through January to a score of 153, but it has started to slide and recently dropped to 124, he said. “It’s [still] higher [though] than anything we saw in 2015, and in most of 2016 – it’s still a strong number,” ​he added.

The future is not so bright 

While optimism about the short term has increased, there would seem to be concerns growing about the future, he said.

“How they feel today, a lot of that has been balance sheet driven​,” he said. “Yesterday and today are better than they were a year ago, but when they think about the next year we see that metric slide – the realization is that 2017 is going to be tough."

In January some 41% of survey respondents thought there would be good times in the next 12 months while, this time out, only 25% of respondents ticked that box, he added.

There could be several factors informing the growing pessimism – the farm economy remains challenging, farm profits have been declining and expenses are slow to adjust to the down turn, he said. “There’s nothing in the next 12 months that points to things improving."

However, the percentage of producers who consider their farms to be “worse off”​ than where they were a year ago also continued to decline he said. Six months ago, about 69% of producers said they considered themselves to be worse off than a year before, but that number has decreased to 51%.

For many producers, the key drivers behind this improvement were record, or near record crop yields, relatively large government payments received in the fall (autumn), and crop prices that strengthened following completion of the fall harvest.

“There’s a lot more room for improvement in sentiment than what we’ve seen,” ​said Widmar. 

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