The agricultural economy improved in April, with producers more confident about current and future conditions for their business. That is according to a new survey measuring the sentiment of agricultural producers across the United States. The Purdue/CME Group Ag Economy Barometer debuted with its April report showing a reading of 106, a number that shows a positive outlook for the ag economy compared to a period of surveys conducted October through March.
The survey will be conducted monthly as a way of showing the health of the U.S. ag economy, similar to the way the University of Michigan measures consumer sentiment each month.
“There really was not anything in the ag sector that looked at the health of the ag economy on an ongoing basis,” says Purdue University’s James Mintert, director of Purdue’s Center for Commercial Agriculture and principal investigator for the barometer. “We looked at the sector and thought ‘there’s really a void here.’ There was clearly interest among producers and ag input suppliers. That is how it evolved.”
To get the barometer reading, 400 agricultural producers are interviewed each month. The methodology for the survey ensures that the producers interviewed are a representative sample of the U.S. ag economy. For example, if 53 percent of U.S. producers are corn farmers, the survey sample will not be complete until 53 percent of respondents are corn farmers.
“The sample that we survey every month is very representative of the people that produce the vast majority of food in the U.S. – a relatively small sample, but really comprehensive when you think about the total food supply,” says Mintert.
Watch Mintert and CME Group’s Managing Director of Commodity Research Dave Lehman explain the methodology and importance of the ag barometer:
The report suggests rising crop prices, timely rains in the Great Plains for wheat, favorable weather in the corn belt, and an improving outlook for exports based on weather in South America were the key drivers for the positive outlook.
The reading also suggested the farm economy is not without concerns. According to the ag barometer report, more than half of respondents expected “bad times” financially for the farm economy over the next twelve months.
Mintert put that outlook in perspective.
“The April number was up from March, that’s true. But when you dig a little deeper, people are still pretty concerned. This is not the boom times that we saw from 2006 or 07 to about 2013. Clearly people are feeling squeezed. Margins are still very tight. People are concerned about the prospects for their farm being in worse financial condition 12 months from now even though they’re feeling better than 30 days ago.”
Read more about the barometer and its methodology here.