The current run of down times for farmers are only going to get worse, according to many farmers.
Nearly 80 percent of the 400 farmers and agricultural producers surveyed in October by Purdue University researchers said they expect bad financial times in the next year, a jump of 11 percentage points since a September survey.
More than a quarter of the farmers surveyed expect the prices of corn and soybeans, the nation’s most important crops, to dip below break-even levels. That, says Purdue agricultural economist Jim Mintert, could really cost the rural economy.
“People that think that are really pulling back,” Mintert says. “They’ve really battened down the hatches and are trying to hold back on every possible expenditure if you think that’s a likelihood.”
The Purdue/CME Group Ag Economy Barometer, an index that attempts to measure the health of the U.S. agricultural economy, fell to its second-lowest reading in November since data collection began in October 2015. Mintert attributes the dip in the index to a pessimistic outlook for the near future from many in the ag world.
“A significant number of the farmers out there don’t expect higher prices to return to moderate, or improve, this situation,” Mintert says. “What they’re looking at is making changes to try and make adjustments in their operation that would bring their break-even prices down low enough that they could actually operate profitably at price levels that are in the ballpark of where we’re at right now or perhaps even a bit lower.”
With a worldwide overabundance of corn and soybeans, and many large export markets teetering on the brink of a slowdown, the farm economy has been sluggish this year.
Some farmers in the survey indicated they planned to cut-back on expensive inputs, such as fertilizer and hybrid seeds, which would only further harm the U.S. rural economy.