Several years ago, Purdue University, in cooperation with the CME Group, initiated a new monthly survey to assess relative conditions in the ag economy. The index is designed to assess both current conditions and future expectations among farmers / ranchers.
The index is based on responses to five key questions:
- We are interested in how farmers are getting along financially. Would you say that your operation today is financially better off, worse off, or about the same compared to a year ago?
- Now, looking ahead, do you think that a year from now your operation will be better off financially, worse off, or just about the same as now?
- Turning to the general agricultural economy as a whole, do you think that during the next twelve months there will be good times financially, or bad times?
- Looking ahead, which would you say is more likely, U.S. agriculture during the next five years will have widespread good times or widespread bad times?
- Thinking about large farm investments – like buildings and machinery — generally speaking, do you think now is a good time or bad time to buy such items?
The index works from a base period of October 2015 to March 2016. A value greater than 100 indicates an increase/improvement in producers’ sentiment compared to the base period, versus responses below 100 are indicative of weaker, less-optimistic sentiment.
This week’s illustration provides a historical perspective of the index (along with a 3-month moving average). The most recent survey pegged in at 132 – and the moving average is hovering right around 135. That’s all indicative of a favorable outlook for agriculture among producers.
What’s your response to the questions above? Are you generally optimistic about agriculture or concerned about the future prospects? Leave your thoughts in the comments section below.
Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited. The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.