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PURDUE/CME GROUP: FARMER SENTIMENT PLUMMETS AS CORONAVIRUS PANDEMIC HITS
Apr. 8, 2020
Source: Purdue Univ news release
To view the complete report, click here.
The Ag Economy Barometer plummeted in March, dipping 47 points (28%) from a month earlier to a reading of 121. The point drop was the largest one-month fall in the life of the index, which dates to October 2015. Declines in agricultural commodity prices and concerns about the coronavirus crisis impact on the U.S. economy and agricultural sector weighed heavily on farmer sentiment in March.
This month's decline in the barometer erased the sentiment improvement that took place this past fall and winter and leaves the index unchanged from its September 2019 reading. The Ag Economy Barometer is generated each month from 400 U.S. agricultural producers' survey responses. This month's survey was conducted from March 16-20, 2020 as the coronavirus crisis escalated in the U.S. and around the world.
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| Figure 1. Purdue/CME Group Ag Economy Barometer, October 2015-March 2020.
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The Index of Current Conditions and the Index of Future Expectations plunged during March as both indices experienced their largest one-month declines since data collection began in 2015. The Index of Current Conditions declined 43 points and the Index of Future Expectations dropped 49 points, both compared to one-month earlier. Producers' sentiment regarding current conditions, with a reading of 111, was the lowest observed since last September when the Index of Current Conditions stood at a reading of 100. The Index of Future Expectations reading of 126 was the lowest value for that index since August 2019.
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| Figure 2. Indices of Current Conditions and Future Expectations, October 2015-March 2020.
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Producers' weakened sentiment was expressed in various ways in this month's survey. First and foremost, U.S. farmers said they were concerned about how the coronavirus will impact their farms in 2020. Seventy-four percent of respondents to the March survey said they were either "fairly worried" (34 percent) or "very worried" (40 percent) about the impact of the virus on their farm's profitability this year.
Coinciding with their concern about the coronavirus impact, an increasing number of farmers said they expect their farm's financial performance this year to be worse than last year. For example, in March, 40 percent of respondents said they expect their farm's financial performance in the upcoming year to be worse than a year earlier, compared to just 30 percent of respondents who felt that way in December.
Expectations for a weaker business climate in the U.S. agricultural sector were also evident. The percentage of producers expecting good times in the agricultural economy in the next 12 months fell from 50 percent in February to 19 percent in March.
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