July Ag Economy Barometer Turns Higher
(KMAland) -- The Purdue University/CME Group Ag Economy Barometer has been detailing a softening in the agricultural economy for months. Michael Langemeier, an agricultural economist with Purdue University,. . .
(KMAland) -- The Purdue University/CME Group Ag Economy Barometer has been detailing a softening in the agricultural economy for months. Michael Langemeier, an agricultural economist with Purdue University, said that sentiment changed with the July Barometer. “The Purdue University/CME Group Ag Economy Barometer rebounded from 113 in June to 126 in July as corn and soybean prices improved during the survey period. That's certainly good news, but what caught our attention wasn't the improvement in sentiment; it was what farmers identified as the biggest challenge facing their operations over the next five to 10 years. Thirty percent said crop or livestock prices. That's an important shift because it tells us where producers think profitability will be won or lost in the years ahead. ”The Barometer detailed some of the farmers’ biggest anticipated challenges in the next several years. “When we asked producers about their biggest long-run challenge, commodity prices topped the list by a wide margin. Farm transition came in second. Cost control followed close behind in third place. Financial considerations and weather were next. Trade and government policy ranked even lower than these other items. That doesn't mean that those issues aren't important, but producers are telling us that maintaining profitable prices or managing through periods of lower prices is their biggest concern. And given today's margin environment, that's very understandable. ”In this era of low prices and high costs, the Barometer showed that farmers think marketing education is more important than ever. “The survey revealed something else that fits this story extremely well. We asked producers what type of risk management education would help them the most in the upcoming year. 44 percent chose marketing, not financial management, or non-strategic planning. It wasn't even close. Marketing was by far and away the most commonly chosen item. That was true for both crop and livestock producers, but it was particularly true for crop producers. When farmers identify commodity prices as their biggest long-term challenge, it makes sense that improving marketing decisions becomes their highest educational priority. ”Despite the challenges, the July Barometer wasn’t entirely pessimistic. “Now, despite these concerns, producers weren't entirely pessimistic. The overall Barometer improved. Current conditions and future expectations both improved, particularly current conditions. The Farm Capital Investment Index also moved higher, suggesting producers felt somewhat more comfortable making major investments than they did just a month earlier. So, this isn't a story about farmers losing confidence. It's really a story about recognizing where the biggest challenges are likely to come from. Even with better sentiment, producers understand that long-term profitability depends heavily on managing through volatile commodity markets. ”Again, that’s Michael Langemeier of Purdue University. Thank you for reading kmaland. comAt KMA, we attempt to be accurate in our reporting. If you see a typo or mistake in a story, please contact us by emailing kmaradio@kmaland. com.