The COVID-19 pandemic and its many market-moving disruptions continue to cause stress at the farm level, according to the Purdue University/CME Group Ag Economy Barometer. The barometer hit 96 in the April survey.
“This is the first time the barometer has been below 100 in over three years,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Over the past two months, producers have felt the first shockwaves being created by the coronavirus.”
In March, the barometer was 122, and in February it hit 168.
The April reading was first time the barometer has fallen below 100 since October 2016, effectively wiping out the improvement in farmer sentiment that took place following the 2016 election.
Producers’ expectations for current and future agricultural economic conditions also declined sharply. The Index of Current Conditions suffered its largest one-month drop, down 39 points in April to 72. The Index of Future Expectations fell 18 points to 108. April’s decline pushed the Current Conditions Index 53% below its all-time high set back in February, while the Future Expectations Index fell 39% over the same two-month period.
The April survey asked: What is your No. 1 concern regarding your farm and the COVID-19 situation? Farmers responded:
- 42%: market access
- 37% financial
- 13%: health and safety
- 8%: other
Additionally, 35% of farmers reported they had made changes in how they operate their farm in response to COVID-19. Nearly 70% of farmers said they are fairly worried or very worried about the impact of COVID-19 on their farm’s profitability this year.
Pessimism about COVID-19 and farm profitability transferred to farmland values. When asked to look 12-months ahead, 35% said they expect farmland values to decline, up from only 13% expecting a decline on both the January and February of 2020 surveys.
However, Mintert says, producers’ longer-term farmland price expectations were more optimistic. Nearly 45% of producers expect higher farmland values fives ears from now; that’s up from 41% in the March survey.
“The divergence between producers 12-month and five-year ahead expectations for farmland values suggests they view the current disruption in agriculture and food markets to be temporary and are looking for markets to rebound down the road,” Mintert says.
The Ag Economy Barometer is based on responses from 400 U.S. agricultural producers and this month’s survey was conducted from April 19-24, 2020.