Farmer Confidence at Record Low Level
The latest Progressive Farmer Agricultural Confidence Index reveals the state of American agriculture is extremely pessimistic. In the latest survey, producers’ overall confidence fell to 92.7 from 99.4 in August and 103.4 a year ago. This is the first time in the history of the survey that the level has been this low, says Katie Micik, director of the confidence index, “It’s an indication that farmers are facing some hard economic realities.” Concerns over their current situation dropped significantly over the past year from 113.3 last December to 101.5 in August, then to 92.2 following this year’s harvest. Farmers’ expectations about the future decreased from 98.0 in August to 93.1 now. The value of 100 is considered neutral. Values above 100 indicate optimism, whereas values below signify pessimism. “The majority of our respondents classified their input costs as bad. In the past we have had some but never a majority (53%),” said Micik. She added that producers also characterize their profit prospects as bad.
The pessimism is not confined to row crop producers, but also involves livestock producers. “For just the second time in the index’s history, both crop and livestock producers have a pessimistic confidence score, with crop producers at 91.0 and livestock producers at 96.4,” said Micik.” She said, not surprisingly, market price uncertainty has contributed significantly to this pessimism. “Ag economists believe this period of low crop prices could last for two to three years, which has crop producers gloomy about the future,” added Micik. “As for livestock producers, recent volatility in the cattle and hog futures markets has them concerned.” The survey indicated that producers see this downturn in the ag economy lasting for several years.
The confidence index, which surveyed 500 crop and livestock producers from November 2 – 25, measures the sentiments of crop and livestock producers on their overall agricultural sector impressions. Since 2010, DTN/The Progressive Farmer has conducted the ACI three times a year – before planting, before harvest and after harvest. Producers also rate current and long-term input prices and net farm income to gauge their attitudes toward the present situation and future expectations.
Low crop prices also played a role in regional differences in the recent ACI survey. With the combination of low prices and the high concentration of corn and soybean acreage in the Midwest, producers in that region are the most pessimistic about their overall confidence (85.3), current situation (79.8), and future expectations (89.0). The overall index scores were slightly higher in the Southeast (96.8) and Southwest (98.0). Expectations for the future remain solidly pessimistic for producers in the Southeast (87.2) and Southwest (95.3). Unlike Midwest producers, Southeast and Southwest producers still have optimistic ratings for their current situations at 111.1 and 102.1, respectively. Micik believes this is due to greater diversity in farm type and more regional cash prices.