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Ag Economy Barometer: Are you optimistic?

With all of the external pressures on U.S. agriculture producers, where is your optimism meter?

You know; you live it. Farming is never easy, but the current climate — political and environmental — is making the world of an agriculturalist that much more difficult.

We are all well aware what lurks: from the quite wet spring for most crop farmers to multiple tariffs casting shadows over the horizon to the impending hurricane heading toward the East Coast. Those bookends we can’t do too much about: God determines how much moisture we should receive, as well as in what form and with what force it will come in.

As for the tariffs that are in place, it appears though those are also out of our control. We hope our elected officials represent our best interests, but as we have all learned over the decades, that we never really had control.

The tariffs, mostly retaliatory, that have been enforced are impacting all facets of the U.S. economy, and I don’t need to tell you how hard these have hit the U.S. hog industry. Commodity prices are also taking hits, again outside of the control of producers.

Each of these external pressures can have a great impact on a producer’s psyche, but what about the multiplier effect?

On the first Tuesday of every month, Purdue University and the CME Group release its cooperative effort known as the Ag Economy Barometer, which is a nationwide measure of the health of the U.S. agricultural economy. A total of 400 agricultural producers are surveyed to offer their sense of the agricultural economy’s health.

The latest barometer, released Sept. 3, showed that producer sentiment weakened in August with an index of 124, dropping 29 points from the July index and just two points below the 126 index of June.

Chart: Purdue/CME Group Ag Economy Barometer, October 2015-August 2019.

Purdue/CME Group Ag Economy Barometer, October 2015-August 2019.

Report authors James Mintert and Michael Langemeier write that this weakened sentiment results from crop and livestock price declines of late-July and early August. Crop prices declined as the condition of those crops still in the field improved and the USDA’s crop production estimates came in larger than anticipated when it released the August Crop Production Report.

The monthly ag barometer offers a glimpse into the sentiment of producers, producers who are facing the same issues and pressures as you. As mentioned before, hardly a facet of the U.S. economy has escaped the impact tariffs have left in their wake.

This latest ag barometer shows that surveyed producers are optimistic that the Chinese trade dispute will be resolved in the favor of U.S. agriculture, though that optimism has waned from the month before. When asked “Do you think the trade dispute with China will ultimately be resolved in a way that benefits U.S. agriculture?”, 72% of the respondents feel that, yes U.S. agriculture will come out ahead once the dust has settled on the U.S.-China trade dispute. That is down from the 78% of optimistic producers in July. On the flip side of that question, those not so optimistic rose from 19% in July to 25% in August, saying that U.S. agriculture will not come out ahead.

Chart: Do you think the trade dispute with China will ultimately be resolved in a way that benefits U.S. agriculture?, March 2019-August 2019.

Do you think the trade dispute with China will ultimately be resolved in a way that benefits U.S. agriculture?, March 2019-August 2019.

I tend to side with the optimists on this question. Our agriculture will go through pains as long as these tariffs are in place, and of course our producers will feel the pinch. For some producers, that pinch will be the last straw in a long line of pinches. For those, I truly feel bad.

But I feel that for those who can withstand the trials, the resolutions reached will be beneficial for the survivors.

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