(The Center Square) – Farmers increasingly are skittish about the future, according to the Purdue University May Ag Economy Barometer (AEB).
The latest monthly numbers declined 20 points to 158 points, which is their lowest level since last September’s AEB measurement of 156 points.
Purdue University calculates its AEB monthly, relying on responses taken from telephone surveys of 400 U.S. agricultural producers. The latest numbers were calculated from a survey conducted May 10-14.
“The biggest take away from the May Ag Economy Barometer report that was released June 1, 2021 is that farmer sentiment for Current Conditions and Future Expectations each fell – leading to a decline in the Barometer indication itself,” Sam Funk, Iowa Farm Bureau senior economist and director, Agriculture Analytics & Research, said in an email to The Center Square.
“Generally, caution in the immediate investment on the farm may be seen,” Funk continued. “While land values are projected by those surveyed to continue to strengthen with returns higher for crops with high corn and soybean prices at this time, the livestock sector reflected a continued decrease in the percentage of surveyed respondents who are expecting ‘Good Times’ over the next five years – especially compared to those looking for better times with crops,” Funk wrote.
The AEB Current Conditions Index fell 17 points from the previous month to 178 points. The Future Expectations Index dropped 20 points below April 2021 to 149 points.
Despite setting an all-time record in April, the Farm Financial Performance Index dropped 12 points in May. However, Purdue University researchers note the May number is the second-highest since the metric was introduced in spring 2018.
The Farm Capital InvestmentIndex fell 10 points to 65 points, compared to April’s 75 points and dropping 13% from the metric’s peak at 93 points in December 2020 and January 2021. Producers responded their plans to increase farm machinery purchases in the year ahead were about the same or lower than in April.
The latest AEB includes a new question to gauge farmers’ plans to construct new buildings or grain bins. According to the survey, 59% said they were less inclined to put up new buildings.
“Farmers are facing some great uncertainties in the next few years, including in how they can plan for the future with the potential loss of a step-up in basis for farm assets and the potential loss of farm equity with estate taxes looming larger for hard-working farmers who have invested back in the growth of their farms over decades,” Funk said.
“Corn and soybean prices are not a certainty to remain high going forward which can make for more unsettled feelings with marketing those crops or for locking in prices to feed livestock. Downside price risk, as well as further upside movements, can affect producers for their ability to price feed or look for marketing output to maintain their ability to compete for higher-priced cash rents or purchasing ground coming up for sale.”