A new survey by DTN reveals that farmers are a lot more pessimistic this spring than they were just a few months ago. The survey of over 500 producers nationwide shows that their confidence level has dropped significantly from when the survey was taken last December. With 100 being neutral, the survey showed a 98, down from 103 at the end of 2014. Katie Micik with DTN says the economy is at the root of the issue, “Farmers are feeling squeezed between high input costs and low commodity prices.” The latest producer confidence rating marks the second time in the last three ACI surveys that producers’ confidence levels were pessimistic.
She said Midwestern producers are among the most pessimistic in the nation, “Midwestern farmers are really down in the dumps, their rating was far below that of the country.” Midwest farmers had a pessimistic rating for confidence (96.3), present situation (95.5), and expectations (96.9), marking the first time ever that a single region did not have at least one optimistic score. She added that cotton growers in the Southeast were also among the most pessimistic producers. Southeast farmers had a 94.2 confidence level, the lowest of any region. A year ago, producer confidence stood at 106.9, then fell 99.8 in August 2014 for the first pessimistic rating since DTN/The Progressive Farmer began the ACI survey in April 2010.
Micik told HAT that, historically, it is the price of corn that drives most producers’ sense of optimism or pessimism, “Especially if you drill down and look at just crop producers, their attitude is very closely tied to the price of corn.” But in the report released on Monday, livestock producers’ pessimism increased as well. “They are worried about the prospects of lower prices brought on by beef, pork and poultry expansion,” she stated. Livestock producer confidence fell to 99.2 from 106.4 in December and a near record high of 116.4 last March.
As a result, she said most producers are hunkering down to try to squeeze as much profit as they can out of this year’s crop, “Farmers are looking for any way they can cut expenses without sacrificing yield.” According to the recent survey, 43 percent say current prices are bad; another 38 percent say prices are normal. Less than 20 percent of survey respondents think current prices are good, the lowest score since the initial ACI survey in April 2010. While producers think current crop input prices are poor, 23 percent remain hopeful that these costs will improve 12 months from now, which is the highest rating for this category in the survey’s history. Thirty-six percent think prices will get worse, while 41 percent say they will stay the same.
Over the past two years, producers’ sentiments toward current farm income has changed dramatically as commodity prices have dropped. In December 2012, 46 percent of producers felt their current farm income was good, and just 15 percent replied bad. In the recent survey, 28 percent said current farm income was good, while 32 percent said it was bad, which is the highest rating in four years. “Producers’ assessment of income one year down the road is even bleaker as 42 percent say income will be worse next year compared with 41 percent who think it will be the same. This is the first time more farmers have been pessimistic than neutral on the income outlook for the upcoming year,” said Micik.