Farmers less optimistic about economic conditions

Farmer sentiment regarding current economic conditions of the agricultural economy dropped 12 points in December, according to the Purdue University/CME Group Ag Economy Barometer.

The Index of Current Conditions registered a reading of 141, down from 153 in November. However, the Index of Future Expectations remained strong, up 2 points in December to a reading of 155.

The Ag Economy Barometer, based on a midmonth survey of 400 U.S. crop and livestock producers, dropped 3 points in December to a reading of 150, down from 153 in November.

In the December survey, producers were asked whether their farm’s 2019 financial performance was better, as expected or worse than their initial budget projections. About 52% stated their initial projections matched their farm’s financial performance, 30% noted it was worse and 19% said it was better than expected.

To better assess the level of financial stress among U.S. farms, producers were asked in both the November and December surveys whether they expected their farm’s 2020 operating loan to be larger, about the same or smaller than in 2019. In a follow-up, those who expected a larger loan were asked why they expected their loan to increase. Approximately one out of five farmers on the two surveys indicated they expect to have a larger operating loan in 2020 compared to 2019. Of those, three out of 10 indicated the reason for the larger loan is unpaid operating debt from 2019.

Carrying over unpaid operating debt from year-to-year is an indicator of financial stress. The results suggest that about 6% of farms surveyed for the Ag Barometer in late 2019 were experiencing financial stress.

The entire December Ag Economy Barometer report is available online.