AGRI-MARKETERS CONFIDENCE INDEX SLIPS A BIT, STILL HIGH
Jul. 3, 2012
Source: Agri Marketing magazine and American Business Media (ABM) Agri-Council
A poll conducted among corporate agribusiness executives last month showed the majority think the current agricultural economy is positive and they expect it to remain so over the next 12 months.
"Directionally, while agri-marketers still view the current situation very positively, we saw their view on future expectations slip slightly - both for agri-marketers' outlook of their own companies, as well as farmers' prospects," says Steve Custer, President, Publishing, Farm Journal Media and Chairman of the American Business Media (ABM) Agri-Council's Research Committee.
"There's likely several things that could be dampening future prospects a bit:
1. Commodity prices have trended higher and high prices often produce some sentiment of "how can it get any better?"
2. By June, planted acres forecasted were at 70 year highs and certainly the highest in all of today's agri-marketers' careers. Again, this might result in sentiment that there won't be more acre volume to squeeze out of the market.
3. Producers have upgraded their equipment fleets over the past couple of years so there isn't the flood of buyers we saw in recent years.
4. Some of the livestock sectors are still hurting with inventories down, reducing demand.
5. Slower than expected EPA approvals resulting in fewer new product introductions.
6. And of course, this disastrous drought may have some agri-marketers concluding growers will suffer and cut back.
"Even with this slight dip, overall confidence is still very high among agri-marketers. A score above 50 indicates a generally positive outlook. We've seen all the indices above 70 since we started tracking it over 2 years ago."
The poll was conducted by Agri Marketing magazine and the ABM's Agri-Council and was sent to 227 executives of companies that develop and sell products to North American crop and livestock producers. A total of 85 (37%) company representatives participated in the poll, including a very wide sampling of large and small enterprises, as well as both crop and livestock-oriented companies.
"The Agri-Marketers Confidence Index (AMCI) is modeled closely along the lines of the well-known consumer confidence studies regularly reported by The Conference Board," reports Custer. "It is an indicator designed to measure the confidence or the degree of optimism among agribusiness marketers on the state of the agribusiness economy. It looks at both their outlook for their own business now and in the future, as well as their perception of the outlook for their customers - the nation's farmers and ranchers."
AMCI is calculated by looking at the percentage of positive versus negative responses.
To read how AMCI is calculated and its complete results, click here.
A few of the highlights include:
*74% of the Marketers rated the current business conditions for their company as positive.
*68% of the Marketers expect business conditions 12 months from now will be better or the same.
*42% expect to increase their marketing communications budget one year from now, 48% expect it to remain the same and only 9% expect to reduce it.
That confidence has shown up in the marketplace," says Lynn Henderson, Publisher of Agri Marketing. "Farmland prices and cash rents continue at record highs. And even though the drought is taking its toll on some areas, farmers continue to make large capital improvements including tiling their fields, buying irrigation equipment and increasing their grain storage and handling capacity.
Confidence Index Results