WEST
LAFAYETTE, Ind., Jan. 7, 2025
/PRNewswire/ -- Farmer sentiment drifted lower in December as
the Purdue University/CME Group Ag
Economy Barometer dropped 9 points to a reading of 136. The decline
was driven by producers' weaker perspective on current conditions
in U.S. agriculture and their farms, with the Index of Current
Conditions falling 13 points to 100. Although the Current
Conditions Index declined this month, it remains 24 points above
its low in September and 5 points higher than in October. The Index
of Future Expectations also fell 8 points to 153, remaining 59
points above its September low and 29 points higher than the
October reading. This month's survey was conducted from
Dec. 2-6, 2024.
"While sentiment dipped this month, it's clear that much of the
postelection optimism about future conditions is still holding
strong," said James Mintert, the
barometer's principal investigator and director of Purdue University's Center for Commercial
Agriculture. "Producers' optimism about the future seems to stem
largely from their expectations for a more favorable policy
environment over the next five years."
Farmers' views on the current and long-term outlooks for
agriculture showed some noticeable differences in December. While
sentiment regarding the current situation and the one-year outlook
was more cautious than in November, expectations for the
agricultural sector over the next five years were notably more
positive. The percentage of producers anticipating widespread good
times in U.S. agriculture over the next five years increased to
57%, from 52% in November and 34% in October. This optimism
extended across both the crop and livestock sectors, with 4-point
and 5-point increases, respectively, in the percentage of
respondents expecting good times. In contrast, views on the
near-term outlook were less favorable. When asked about financial
conditions on their farms compared to a year ago, 57% of producers
reported worse conditions in December, up from 51% in November.
Similarly, 51% of farmers expressed concern about the U.S.
agricultural economy over the next 12 months, an increase from 40%
in November.
Following a 13-point increase in November's survey, the Farm
Capital Investment Index fell 7 points to a reading of 48. The
weakening in investment sentiment was reflected in a lower
percentage of farmers who believe it is a good time to invest,
dropping to 17% from 22% in November. At the same time, the
proportion of producers who viewed it as a bad time to invest
increased slightly to 69%, up from 67%. This dip in investment
sentiment mirrored the decline in the Farm Financial Performance
Index, which fell 8 points in December to 98.
Continuing the trend from November, the Short-Term Farmland
Value Expectations Index dropped 5 points to a reading of 110,
following a similar 5-point decrease the previous month. Despite
these two consecutive decreases, the short-term index remains well
above its low of 95 in September. The Long-Term Farmland Value
Expectations Index, which reflects producers' outlooks for farmland
values over the next five years, decreased by just 1 point to
155.
Farmers' outlook for the future of their farms and the
agricultural sector remains noticeably more positive than at the
end of summer. This shift appears to be driven by expectations of
policy changes following the 2024 election, particularly in areas
such as environmental, estate and income tax policies. Leading up
to the election, over 40% of producers anticipated more restrictive
environmental regulations over the next five years. However,
following the election, fewer than 10% expressed concerns about
tighter regulations. Similarly, 40% of farmers expected estate
taxes to rise before the election, but less than 10% foresee an
increase in estate taxes within the next five years. Regarding
income taxes, nearly 38% of producers anticipated rises before the
election, with that percentage also dropping below 10%
postelection. Lastly, more than half (55%) of survey respondents
expect the election outcome to lead to a stronger farm income
safety net than was in place prior to the election.
One ongoing concern for U.S. farmers is the future of
international trade in agricultural products. In December, 4 out of
10 (43%) farmers chose "trade policy" as the most important policy
for their farm in the upcoming five years. Both the November and
December barometer surveys asked producers about the likelihood of
a "trade war" that could negatively affect U.S. agricultural
exports. The results indicate that many producers remain worried
about this scenario. In December, 48% of farmers said they believe
a trade war that harms agricultural exports is either likely (32%)
or very likely (16%), an increase from 42% in November. Conversely,
only 21% of respondents in December viewed a trade war as either
unlikely (17%) or very unlikely (4%), down from 26% in
November.
About the Purdue University Center for Commercial
Agriculture
The Center for Commercial Agriculture was
founded in 2011 to provide professional development and educational
programs for farmers. Housed within Purdue
University's Department of Agricultural Economics, the
center's faculty and staff develop and execute research and
educational programs that address the different needs of managing
in today's business environment.
About CME Group
As the world's leading
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and foreign exchange trading on the EBS platform. In addition, it
operates one of the world's leading central counterparty clearing
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About Purdue
University
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University is a public research institution demonstrating
excellence at scale. Ranked among top 10 public universities and
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United States, Purdue discovers
and disseminates knowledge with a quality and at a scale second to
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Author: Morgan
French
Source: James
Mintert, jmintert@purdue.edu, 765-494-7004
CME-G
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SOURCE CME Group