Ag Producer Confidence Reaches New Low… Again
Omaha, Neb. (PRWEB) September 19, 2016 -- Bad has become the new normal as ag producer confidence continues its downward spiral after setting yet another all-time low, according to the latest DTN/The Progressive Farmer Ag Confidence Index (ACI).
Overall producer confidence has fallen dramatically the past year. In that time, it plunged from a score of 98.2 to a record low of 71.9 in August. The value of 100 is neutral. Values above 100 indicate optimism, while values below signify pessimism.
“In seven years of tracking producers’ attitudes about their economic situation and prospects, producer confidence has never been worse,” said DTN Editor-In-Chief Greg Horstmeier.
The confidence index, which surveyed 500 crop and livestock producers between Aug. 9-23, measures their sentiments on their overall agriculture sector impressions. Producers also rate current and long-term input prices and net farm income to gauge their attitudes toward the present situation and future expectations. Since 2010, DTN/The Progressive Farmer has conducted the ACI three times a year – before planting, before harvest and after harvest.
The combination of low commodity prices, high input costs and low-income projections have producers feeling more pessimistic about their economic situation than ever before.
“Harvest time is usually a season of optimism for ag producers, but not this year,” said Horstmeier. “Many producers will need record crops just to break even given today’s rising production costs.” Earlier this month, USDA projected record corn and soybean production of 15.1 billion bushels and 4.2 billion bushels, respectively.
Producers’ attitudes for the present situation dropped sharply over the past year from an optimistic score of 105.2 to index all-time low of 56.0. Producers’ expectations for the future remain pessimistic but did not vary as much as other index scores, falling from 94.6 last August to 80.7.
“Our previous index research indicated that producers’ attitudes trended neutral-to-optimistic for their present situation and pessimistic for the future,” said Horstmeier. “That’s now flipped with producers now more pessimistic for the current situation and optimistic for the future.”
Horstmeier said this trend change is the result of the declining prices and rising costs that followed multiple years of high commodity prices. “Producers knew the good times couldn’t continue so they were pessimistic regarding the future. As those conditions changed, producers have become gloomier about their current situation but now appear hopeful things will turn around over the next 12 months,” he explained.
Other key ACI findings include:
- The overall indexes for producers in the Midwest (58.5), Southeast (77.8) and Southwest (84.6) remain in the pessimistic range.
- Driven by low market prices, producers in the large row crop regions of the Midwest (31.6) and Southeast (89.4) remain pessimistic about their present economic situation, whereas producers in the Southwest (107.1), where specialty crops play a factor, are optimistic.
- With prices falling for most livestock products especially dairy, livestock producer confidence continues its dramatic slide from 107.1 last August to now 63.6, with their present situation at 61.6 and future expectations at 64.5.
- 40 percent of producers consider net farm income as bad, and 55 percent said it will get worse over the next year.
- 39 percent of producers surveyed rate input prices as bad, with 57 percent saying that input prices will not improve in the next 12 months.
“Four times as many producers expect to see input costs, particularly for seed, get worse than get better,” said Horstmeier. “Land costs show signs for improvement, and producers recently have encountered favorable fertilizer costs. Which leaves chemicals and seed as major cost-reduction targets for crop producers.”
Horstmeier indicated that producers are extremely hesitant to commit to any 2017 crop expenses right now. He says seed suppliers are reviewing their pricing models and may need to make deeper-than-usual discounts and offer better financing terms to get crop producers to make commitments.
Agribusiness Confidence Index
Agribusiness confidence has held rather steady over the past year, despite many producers cutting input costs. In fact, agribusinesses feel better about current conditions.
According to the latest DTN/The Progressive Farmer Agribusiness Confidence Index, which measured the sentiments of 100 agribusinesses Aug. 15-19, agribusiness confidence remains pessimistic but improved slightly from 88.7 a year ago to now 90.6.
Unlike producers, agribusinesses are still optimistic about their present economic situation, which had a value of 105.6 though it fell from 111.4 in August 2015.
“This is somewhat surprising, but it is likely due to the fact that farmers still need to invest in inputs, though they are being more cautious about purchases. Historically, the Agribusiness Index has been more neutral, with smaller swings to the optimistic or pessimistic sides, than for farmers,” Horstmeier said.
In addition, agribusiness expectations for the future improved slightly from 72.5 last August to 79.7 last month. Cash from the 2015 farm programs has started to flow to producers, Horstmeier said, which has brightened the outlook for some agribusinesses.
For more on the DTN/The Progressive Farmer Agriculture/Agribusiness Confidence Index, visit DTNPF.com. Follow DTN/The Progressive Farmer on Twitter at @DTNPF or on Facebook at facebook.com/dtnprogressivefarmer.
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About DTN/The Progressive Farmer
DTN/The Progressive Farmer is revolutionizing the agriculture industry with its game-changing agricultural information solutions and market intelligence that enable customers to actively and effectively manage their businesses. The company’s insightful, independent content along with proprietary business management tools and in-depth market analysis empower better decision making from today’s forward-looking agricultural producers, agribusiness leaders and commodity market traders. For the latest editorial, weather and market information or more on all DTN/The Progressive Farmer services, visit dtnpf.com. Follow DTN/The Progressive Farmer on Facebook at facebook.com/DTNProgressiveFarmer and on Twitter at @DTNPF.
Greg Lammert, Rhea + Kaiser, +1 (630) 955-2526, [email protected]
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