Farmers can be the most optimistic people in the world; they can also be the most pessimistic. In the short term, this mood swing can be driven by the weather, the market, or the win/loss record of their favorite college sports team. At the recent farm show in Fort Wayne, the mood of pessimism was almost palpable. Exhibitors reported that, while crowds were good, very few were interested in buying anything or even finalizing orders for the 2018 crop. There was also very little interest in discussing selling any of their 2017 production. The most popular booth at the show was the NAPA booth because they were giving away free 5 gallon plastic buckets. “Well you always need a another free bucket,” said the thousands who walked out of the show with the bright yellow buckets.
This mood has been documented by Purdue in its monthly Ag Economic Barometer. This monthly survey measures the level of optimism farmers have about the farm economy. Ever since harvest, the barometer has been falling. “The decline has been driven entirely by producers adopting a more pessimistic perspective regarding the future,” said the Center for Commercial agriculture, which conducts the monthly survey. As recently as October, the Future Expectations index was at 137. The index fell to 127 in November, and, in December, dropped again to 120 – the lowest reading for the Index of Future Expectations since October 2016.
A look back over the past 2 years reveals an interesting trend. Farmer optimism spiked right after the election of Donald Trump. Since then, optimism has been on the decline. Today more farmers feel their farms will be in worse economic shape a year from now. This is most likely related to the lack of progress we have seen in Washington on key issues including trade, immigration, and the Farm Bill. While there has been progress on reducing regulations and putting a muzzle on the EPA, no significant improvement has been seen in the prices or profit margins for most Midwestern row crop farmers.
The winter extension outlook meetings that farmers attend have not been filled with optimism about prices and profits. Most economists are urging producers to sharpen the pencil and hunker down to ride out another year. So it is no wonder why farmers are in a bad mood.
There are, however, a few things on the horizon that promise some improvement. First, the recently passed tax reform package will put some cash in your pocket — not only for farmers but also for consumers. This extra money will continue to stimulate the U.S. farm economy and help with improved demand. In addition, the economies of other countries around the world are also heating up which will likely lead to increased demand for food products from the U.S. While we have not seen it yet, many market forecasters are telling me that demand will pick up in 2018 and that we will make a good deal of progress in reducing the surplus that has been depressing prices.
Finally, spring is coming soon. In less than 60 days, we will have the planters out and calibrated and will be waiting for some good weather to plant the 2018 crop. Nothing improves the attitude of a farmer like putting seed in the ground. In the meantime, let’s keep things in perspective, 2018 is going to be another tough year and we just have to find a way to work through it. Putting Donald Trump in the white House is not going to solve everything, and things will get better — it is just going to take longer than we want.