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Farmer sentiment pulls back post-election; regulation, trade, taxes top concerns

By Kami Goodwin
CME Group and Purdue University

WEST LAFAYETTE, Ind., and CHICAGO — The Purdue University/CME Group Ag Economy Barometer dropped 16 points to a reading of 167 in November, down from its all-time high set just one month ago. The decrease in sentiment was led by farmers’ more pessimistic view toward the future of the agricultural economy, with the Index of Future Expectations falling 30 points to a reading of 156 in November. The ongoing rally in commodity prices and CFAP-2 payments continued to support producers’ view of current economic conditions, as the Index of Current Conditions rose 9 points in November to 187, an all-time high for the index.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses in a telephone survey. This month’s survey was conducted Nov. 9-13, after the U.S. election.

“Producers were more pessimistic about future economic conditions on their farms in November than they were just a month earlier,” said James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “This is the opposite of what happened following the November 2016 election. That year producers became much more optimistic about the future following the election and, in turn, that optimism about the future helped drive the Ag Economy Barometer up sharply in late 2016 and early 2017.”



Farmer expectations regarding changes in policies affecting U.S. agriculture in the next five years, October vs. November 2020. Graphic by James Mintert, Purdue/CME Group Ag Economy Barometer

To learn more about what factors might be motivating the shift in producers’ sentiment pre- and post-November election, a series of questions focused on producers’ expectations for environmental regulations, taxes and other key aspects of the agricultural economy, were included in both the October and November surveys. Comparing results from October to November, far more producers in November said they expect to see: 1) environmental regulations impacting agriculture to tighten over the next five years; 2) higher income tax rates for farms and ranches; 3) higher estate tax rates for farms and ranches; 4) less government support for the U.S. ethanol industry; and 5) a weaker farm income safety net provided by U.S. government program policies.

Since the summer of 2019, Purdue researchers have been tracing producers’ perceptions regarding the ongoing trade dispute between the U.S. and China­ – specifically, whether they think the dispute will be resolved soon and whether the outcome will ultimately benefit U.S. agriculture. In January and February 2020, 80% of survey respondents said they expected to see the trade dispute with China be resolved in a way that benefits U.S. agriculture. However, on the November survey, the percentage of farmers expecting a favorable outcome for U.S. agriculture declined to 50%, the lowest percentage recorded since the question was first included on a barometer survey. In a related question, only 44% of respondents to the November survey said they think it’s likely that China will fulfill the Phase One Trade Agreement requirements, down from 59% a month earlier.




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