Farmer confidence about the wisdom of investing in operations, future value of farmland and strength of the farm economy is plummeting, a monthly survey released Tuesday showed.
The latest Ag Economy Baro-meter survey of Purdue University, conducted in mid-May before the latest federal bailout of farmers was announced, showed its lowest reading since October 2016.
“The Ag Economy Barometer took another sharp drop,” said Jim Mintert, an agriculture economics professor at Purdue. “So that’s two months in a row for a sharp decline.”
The trade war with China, its heaviest effects felt by soybean farmers, has now dragged on for a year and looks no closer to resolution. A wet spring has delayed planting and likely cut into the 2019 harvest across the Midwest. Corn and soybean prices remain in a slump, though they have ticked up somewhat recently as a poor harvest began appearing more likely.
Some 55% of farmers surveyed by Purdue said they expect their wealth to decline in the next 12 months, compared to 35% a year ago.
Farmers’ expectations that they will make large capital investments in their farms hit their lowest reading since the survey’s inception in 2015.
Farmland values have been resilient despite farmers’ struggles, but farmer confidence in the future value of their land is deteriorating.
Thirty percent of farmers surveyed said they expect farmland prices to drop in the next 12 months, a share that has been ticking up over the past five months.
Optimism about the trade war with China is dissipating as well. As recently as March, 45% thought the soybean trade dispute would be settled by July 1. That number dropped to 20% in May.
“Farmers are becoming less optimistic that the trade dispute will be resolved quickly,” Mintert said.
The share of farmers who believe the trade dispute will be resolved in a way that is favorable to U.S. agriculture is also dropping, from 77% in March to 65% in May.