March 26 - Farmers are feeling less optimistic about the ag economy than they did after last year's harvest, according to the latest results of the DTN/The Progressive Farmer Agriculture Confidence Index.
At 106.9, the DTN/The Progressive Farmer Agriculture Confidence Index reflects an overall positive outlook. It's buoyed by last year's strong farm income (present situation index) and bogged down by lower expectations of the future. At 106.9, the index reflects an overall positive outlook, buoyed by last year's strong farm income and bogged down by concerns about the future. Last December's index was 109.1.
The Agriculture Confidence Index asks farmers to assess their farms' present situation and what they expect 12 months in the future. Farmers' assessment of their present situation came in at 135.3, a strong positive reading. Their expectations for the year ahead came in at 88.2, a firmly negative perspective.
A value of 100 is considered neutral with higher values indicating optimism and lower values indicating pessimism. DTN surveyed 500 farmers and ranchers across the country between March 1 and March 11. DTN conducts the survey before planting, before harvest and after harvest.
Seasonally, producers feel about the same as they did this time last year, when the index was 108.5. While farmers' expectations are up slightly from last year's 87.4 reading, the present situation rating is lower than last year's 140.2.
"The current situation is down mainly due to net farm income and not so much from input prices," said economist Robert Hill, owner of Calendonia Solutions, who designed the survey. "The drop is consistent between crops and livestock. In my view, this is simply a hangover from the drought where they do not quite feel whole after having to rely on insurance payouts."
Agribusiness Confidence Grows
Agribusinesses are more positive than they were after last year's grain harvest with the overall index value increasing to 104.3 from 100.7. Their assessment of the present situation dropped by 3.5 points to 112.7, but their expectations for the future gained 8.4 points to 98.5, largely on expectations of higher sales and better profitability down the road.
DTN surveyed 100 agribusinesses between Feb. 26 and March 4 about current sales of goods and products, profitability and overall business prospects.
While agribusinesses feel better about business than they did after last year's harvest, they're still not as optimistic as they were a year ago. Last year, the Agribusiness Index was 111.1, and expectations for the year ahead were 10 points higher than this year.
"How businesses feel about their prospects is very dependent on where they are based," said Elizabeth Hund, senior vice president for U.S. Bank's food industries division. "In Indiana and Illinois, they're feeling pretty good. Things are getting back to normal. That's not so in Kansas, Nebraska and Colorado."
When it comes to profitability, 39 percent of respondents consider it good, while 54 percent say it's normal, which Hund attributes to businesses improving their management of high grain prices.
"The 2008 run-up in prices brought a lot of stress into the market, and it taught us all something," she said. "The last cycle of high prices is so recent that people remember it, and they're better prepared."
Looking ahead, 67 percent of survey respondents expect business profitability to be the same a year down the road while 20 percent expect improvement. Thirteen percent believe it will get worse.
Click here for more survey information.