Just one month after setting an all-time high, the Purdue University/CME Group Ag Economy Barometer dropped 16 points in November, and the outcome of the presidential election may be playing a role.
Purdue economists say the decrease in sentiment was led by farmers’ more pessimistic view towards the future of the agricultural economy.
The barometer dropped to a reading of 167. The Index of Future Expectations fell 30 points to a reading of 156 in November.
But another reading, the Index of Current Conditions rose 9 points in November to 187, an all-time high for the index.
“Producers were more pessimistic about future economic conditions on their farms in November than they were just a month earlier,” said Jim Mintert, the 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.”
The barometer analysts sought to find out why producer sentiment changed during the one-month period from before and after the election.
The barometer survey shows considerably far more producers in November said they expect to see a list of growing governmental regulations and taxes which could impact their operations over the next four years.
“When asked about income tax rates, 66% of respondents in November said they expect higher rates for farms and ranches five years from now compared to just 35% who felt that way in October,” said Mintert. “Similarly, 66% of respondents in November also indicated that they expect estate tax rates for farms and ranches to rise compared to 40% who said they expected higher estate taxes for farms and ranches back in October.”
The Ag Economy Barometer is compiled each month, gauging responses from 400 U.S. agricultural producers.
To view the full report, click here.
Purdue’s Jim Mintert provides analysis in the video below.