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 The Index of Future Expectations continued its upward trend from
last month, up 5 points to a reading of 169. However, their
views on current conditions slipped. The Index of Current
Conditions dropped 7 points in April, to a reading of 195. The
Ag Economy Barometer is calculated each month from 400 U.S.
agricultural producers’ responses to a telephone survey. This
month’s survey was conducted April 19-23.
“The strength in commodity prices continues to drive improving
expectations for strong financial performance, even as many are
seeing rising input costs,” said James Mintert, the barometer’s
principal investigator and director of Purdue University’s
Center for Commercial Agriculture.
The Farm Financial Performance Index hit a record high in April,
up 13 points from March to a reading of 138, 83 points higher
than one year ago. This month 50% of producers indicated that
they expect better financial performance in 2021 compared to
2020, up from 39% who felt that way in March. Despite
expectations for their farms’ strong financial performance,
farmers were less inclined to think now is a good time for large
investments in buildings and equipment than they were in March.
However, in a follow-up question, when asked more specifically
about their farm machinery investment plans, more producers in
April said they planned to increase their farm machinery
purchases than in March.
"The divergence between the two responses could be reflective of
the run-up in building costs and difficulty in scheduling
construction projects across the U.S," Mintert said.
Possible changes in U.S. tax policy are on the minds of ag
producers. Ninety-five percent of respondents are either
somewhat or very concerned that changes in tax policy will make
it more difficult to pass their farms on to the next generation.
Eighty-seven percent expect capital gains rates to rise over the
next five years. Three-fourths said they are “very concerned”
about the possible elimination of the step-up in cost basis for
farmland in inherited estates and just over two-thirds (68%) of
respondents said they are “very concerned” about a possible
reduction in the estate tax exemption for inherited estates.
Farmers expect the rise in farmland values to continue unabated
over the next year as the Short-Run Farmland Value Expectations
Index rose to a record high reading of 159, 11 points higher
than a month earlier. Producers were less optimistic, however,
when asked about the 5-year outlook for farmland values as the
Long-Term Farmland Values Expectations Index declined 9 points
in April to a reading of 148.
“The difference in producers’ short- versus long-term
expectations could be an indication that they are concerned that
the rapid rise in farmland values we’re seeing may not be
sustainable over the long run,” Mintert explained.
With COVID-19 vaccinations widely available across the U.S.,
attention is shifting to the percentage of the U.S. population
that does not plan to get vaccinated. To learn more about
commercial ag producers’ vaccination plans and compare that to
the U.S. population at large, the survey asked producers about
their vaccination plans since October 2020. The percentage of
producers saying “they do not plan to get vaccinated” declined
from a high of 37% in October to 28% in January and has
fluctuated between 28%-32% since that time.
Polls from Monmouth University conducted in January, March and
April indicate 21%-24% of U.S. adults will “likely never get the
vaccine,” while a Pew Research Center poll from February
indicated that 30% of U.S. adults would “probably” or
“definitely” not get a COVID-19 vaccine. Comparing this month’s
survey results to these broader population surveys suggests the
reluctance to get vaccinated for COVID-19 among U.S. ag
producers mirrors that of the larger population of all U.S.
adults.
[to top of second column] |
Following a nearly one-year hiatus, more in-person ag
field days, workshops and educational events are being planned for
2021. On both the March and April barometer surveys, we asked
producers if they are more or less likely to attend these programs
than they were in 2020. Responses were mixed. Just over 70% of
respondents said they are more likely to attend in-person events
this year, but 28 to 35% of producers said they are less likely to
attend in-person events. For program planners, this implies a need
to offer programs in a hybrid or virtual format to reach the broad
audience of commercial ag producers.
Read the full Ag Economy Barometer report. The site also offers
additional resources – such as past reports, charts and survey
methodology – and a form to sign up for monthly barometer email
updates and webinars.
Each month, the Purdue Center for Commercial Agriculture provides a
short video analysis of the barometer results, available, and for
even more information, check out the Purdue Commercial AgCast
podcast. It includes a detailed breakdown of each month’s barometer
and a discussion of recent agricultural news that impacts farmers.
The Ag Economy Barometer, Index of Current Conditions and Index of
Future Expectations are available on the Bloomberg Terminal under
the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.
About the Purdue University Center for Commercial Agriculture
The Center for Commercial Agriculture was founded in 2011 to provide
professional development and educational programs for farmers.
Housed within Purdue University’s Department of Agricultural
Economics, the center’s faculty and staff develop and execute
research and educational programs that address the different needs
of managing in today’s business environment.
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[Writer: Kami Goodwin
Source: James Mintert] |
