Agriculture Confidence Index - Farmers Happy as Harvest Begins

September 27, 2018

OMAHA (DTN) -- There's just no denying it, the results of the most recent DTN/The Progressive Farmer Agriculture Confidence Index are eye-popping.



Despite increasing trade war pressures, falling soybean prices, and a general worry about what the 2018-19 grain marketing season will bring, farmers responding to the DTN/Progressive Farmer survey said they are as confident as ever, pushing the index to a record-setting 164.8.


That's exactly 30 points higher than the index of spring 2018, and 10% higher than its previous high mark, set in 2010, noted Robert Hill, economist and original designer of the ACI.


The big boost in the overall index, Hill said, comes from how farmers felt about their current business health.


Farmers responding to the telephone survey answer a series of financial and income questions that compare the present to how they expect conditions to be in the coming year. A score is given to rate their "present situation" and to their "future expectations." Those numbers are combined to create the overall Agriculture Confidence Index.


Index levels above 100 are considered optimistic compared to baseline scores when the index began; scores lower than 100 are viewed as pessimistic versus the baseline.


In this most recent survey, farmers rated their present situation at 172.4, up 68 points from spring 2018 and a whopping 100 points above what farmers said about conditions one year ago. In comparison, farmers in August 2018 set future expectations at 161.1. That's an optimistic number, but just 9 points higher than this spring and 39 points higher than pre-harvest 2017.


"So the growth comes from the present situation piece of the index, and that has more than doubled over the past 12 months," Hill said.


"These record-setting results are consistent across all regions and types of farmers studied in the survey, whether Midwest, Southeast, or Southwest, and whether crop grower or livestock producer."

This "convergence of present and future scores," showing farmers more optimistic about the present than the future, is a return to normalcy in the relationship of the two scores, he said. The relationship of those two scores had changed following the 2016 presidential election, with farmers neutral to slightly optimistic about the present, but with very high hopes for the future.


The switch back to the pre-2016 relationship indicates most farmers are satisfied with conditions as they are playing out, Hill said. That's a huge break, however, from the commentary coming from the leadership of many farm and agricultural groups and from others involved in agriculture but who are not necessarily active farmers.


"I always hear farmers are always pessimistic, but I think they are optimistic," said John Heisdorffer, who farms near Keota, Iowa, and is current president of the American Soybean Association. "Every year we stick a crop in the ground hoping it will come up and we're going to have a crop. And the same way with prices. Prices go down and we hold, optimistic they are going to go back up."

ASA leadership is concerned about the long-term implications of the current trade war.


"We have spent maybe hundreds of millions of dollars trying to get China as a trade partner with 30 to 40 years of people working on this," Heisdorffer said. "To lose any part of this, you just can't get it back."


"I got more faith