WEST LAFAYETTE — Ongoing concern about the financial impact of trade conflicts has caused agricultural producer confidence to drop to its lowest level in two years, according to the Purdue University Ag Economy Barometer.
The September barometer reading was 114, down 15 points from August. The barometer is based on a monthly survey of 400 farmers from across the country, and is a joint venture between Purdue's Center for Commercial Agriculture and Chicago-based CME Group Inc.
Significant declines were seen in two barometer categories compared to their August numbers: The index of future expectations fell 10 points, and the index of current conditions fell 25 points.
"The barometer readings have been unusually volatile over the past few months," said Jame Mintert, director of the Center for Commercial Agriculture. "Concerns about the ongoing impact of trade conflicts, and especially China's tariffs on imports of U.S. ag products, continue to reverberate throughout the U.S. agricultural sector."
Throughout 2018, producers indicated that financial conditions on their farms had deteriorated significantly and their expectations for the future were also lower, according to the barometer.
In September, 54 percent of farmers surveyed said their farm's financial condition was worse than a year earlier, up from 38 percent who felt that way in June, according to Mintert.
The September survey also indicated that 33 percent of of producers expect their farm's financial condition to be worse a year from now, up 15 points compared to responses received on the same question in June, he added.
Trade conflicts and tariffs continue to be a source of worry among U.S. farmers.
When asked whether they expect trade conflicts to lower their farm's net income, more than 70 percent of farmers survey said they expect lower income in 2018 because of trade disruptions. A large majority of respondents said they expect income to drop more than 10 percent, according to Purdue's barometer.
The negative outlook was particularly noticeable when farmers were asked whether now is a good time to invest in farm machinery and buildings for their operations and on next year's farmland cash rental rates.
In September, 70 percent of farmers surveyed said it was a bad time to invest in machinery and only 20 percent said it was a good time to invest in farmland rentals, the lowest combined reading on large farm investments since the barometer launched in October 2015.