Farmer Optimism Fades According to Latest DTN/The Progressive Farmer Ag Confidence Survey

MINNEAPOLIS and OMAHA, Neb., Sept. 05, 2017 -- The post-2016 presidential election bump, which was credited with giving farmers and others in rural America high hopes for the future, appears to be flattening, according to the most recent DTN/The Progressive Farmer (DTN/PF) Agricultural Confidence Index (ACI).

The survey, which was conducted in August 2017, shows that while farmers are more optimistic than August 2016, the strong optimism they started the year with is waning.  The overall farmer Confidence Index for August fell more than 26 points, to a moderate 104.3, compared to results of the previous survey conducted in March.  While still 45 percent above the 71.9 Index conducted in August 2016, it's a sign the so-called "Trump Bump" is fading. 

"Since the presidential election in November 2016, ACI scores have shown high expectations despite the general farm economy," said Greg D. Horstmeier, editor-in-chief of the DTN digital newsroom. "With global grain supplies still at a high level, and most U.S. farmers expected to bring in a solid harvest this year, holding down commodity prices, the shine appears to be moderating."

Since 2010, DTN has surveyed farmers three times a year to determine their opinions about their current economic situation and about that situation in the year to come. Those answers create a score for farmers' "current condition," how they feel about their businesses at the time of the survey; and a score for their "future expectations" for the coming year. Those two scores are combined to create the Ag Confidence Index.  Index levels above 100 are considered optimistic, those less than 100 are viewed as a pessimistic attitude.

Farmers Worry About the Future
Farmers' responses put their "current conditions" score at 76.7, about 9.5 percent higher that a similar score of 70 from March 2017.  The greatest move, and a worrisome sign, is in farmers' attitudes about the future. When asked about their sales and income prospects a year from now, farmers gave answers that produced a score of 119.6. While still in positive territory, that's down 26.8% from the 163.6 score farmers gave in March.  In August 2016, farmers were even more pessimistic about the future, producing a score of 80.7, so year-over-year the rating is up 48.2 going into harvest.

"The ACI is designed to reflect farmers' opinions about their financial health," Horstmeier said. "In the previous two surveys, however, it appeared that political and social actions were boosting optimism."  Horstmeier went on to say, "Health care changes haven't come, and signs are new tax rules and other promised changes are not yet delivered. Therefore, attitudes appear to have returned to reflecting the economic realities on the farms and ranches."

While livestock producer scores also fell, they remained slightly more positive than crop producers. Overall confidence scores were 111.2 for livestock, and 100.8 for crop farmers, both down from March 2017 scores. Again, the expectation scores caused the overall drop, as both types of farmers felt essentially the same about their current situation as they did in March.  Expectations dropped 29.6 points to 120.2 for livestock producers; and fell 51.5 points to 118.2 for crop farmers.

Those results are in line with the current situation for cattle feedlot owners. “Feedlots through 2017 have had near-record profits,” according to DTN/PF livestock analyst John Harrington. He noted that in recent weeks, however, DTN data showed feedlot returns slipping into the red.

Overall, the Agricultural Confidence results showed southwest farmers had higher optimism than their peers in the Midwest or Southeast, the three regions DTN/PF surveys. It should be noted that those scores do not account for the current damage and recovery from Hurricane Harvey.

USDA Income and Financing Numbers
In addition to standard ACI questions, the August survey asked farmers to rate their access to financing, as the ag lending industry has begun to tighten credit as farm profits fall. In its August forecast, USDA bumped up net farm income for 2017 to $63.4 billion nationally, 3.1 percent higher than 2016's net farm income. However, USDA also said that while income is up, farm operations would mostly lose money in 2017, as costs also have climbed.

When asked, more than half of all farms said they are not concerned about obtaining necessary operating loan financing. However, about one-third of all producers are concerned about a lack of financing through traditional sources.  Larger farms are feeling the biggest pinch so far. For producers with revenues above $1 million, 41 percent say they have some concern about access to operating credit for the coming year.

Historically, a telltale sign of financial difficulty is farmers' need to turn to input suppliers to finance purchases because banks either refuse to lend or won't lend enough for a farmer's full needs. Most farmers surveyed said they had not yet turned to suppliers for financing.

Agribusiness Confidence Index Results
A separate survey, conducted simultaneously with ACI, examines agribusiness owner confidence. Historically, the DTN/PF survey of agribusiness owners have produced more moderate scores, never reaching the optimism nor pessimism of their farmer customers. That held true for the 100 business owners surveyed in late August. The overall Agribusiness Confidence Index was 106.6, down three points from the survey conducted in March, 17.7 percent above the 90.6 score obtained in August 2016 results.

Businesses put their present situation at 95, essentially even with the March results, yet 10 points below a year ago. Their future expectations produced a score of 114.5, again slightly below the 119.3 score in spring, yet 43.7 percent above 79.7 from a year ago.

The next Ag Confidence Index will be conducted just before the end of the 2017 calendar year.

About DTN
DTN is the independent, trusted source of actionable insights for 600,000 customers focused on feeding, protecting, and fueling the world. Customer-centric and employee-driven, the company focuses on empowering agriculture, oil & gas, trading, and weather-sensitive industries through continuous, leading-edge innovation. It also owns and operates The Progressive Farmer magazine, the premier publication in Agriculture for over 130 years. Based in Omaha, Nebraska and Minneapolis, DTN is owned by TBG, a private century-old investment holding company headquartered in Zurich.

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