It’s no secret things are tough in farm country. Still, the latest Purdue Ag Barometer shows farmers are growing more concerned over worsening financial condition. In fact, farmer sentiment expressed in the survey dropped to its lowest level since October 2016, down 15 percentage points since August.
“When we ask people ‘would they say that their farm operation today is better off, worse off or about the same compared to a year ago?’ the percentage of people saying ‘worse off’ jumped from 47% to 54%,” says Jim Minert, director of the Center for Commercial Agriculture at Purdue University. “As you look at that data, notice that it's the worst reading we've had in well over a year with respect to the percentage of people saying they were worse off than a year earlier.”
In addition, 33% of producers said they expect their farms financial condition to be worse a year from now. In June only 18% of farmers felt that way.
Indiana farmer Jeff Peterson says that if Chinese tariffs aren’t resolved by the time planting decisions are made, they could sway acres away from soybeans.
“I think guys might go a little more corn and that might affect the prices later on,” he says. “That has to get resolved within the next few months. Ag lenders are watching the situation closely leading to some tough conversations.”
Allen Hoskins of American Farm mortgage says he’s not seeing a big uptick in loan delinquency rates, but that could become a reality next spring.
“I would anticipate that on the cash grain side, the delinquency may not start showing its head until February, March of next year,” he says.
According to David Kohl with Virginia Tech, strong farmland values are keeping the majority of farmers in business through this downturn.
“We're six years in on this one, and thing that's holding us up is our land values,” he says. “If land values started coming off, we could be in some serious trouble, because land is $2.8 trillion of the $3.5 trillion farm balance sheet. It’s 81% of the balance sheet so it still gives producers the option to refinance.”