Agriculture Confidence Index

OMAHA (DTN) -- Higher incomes and increased commodity prices have farmers feeling more confident about the present and their immediate future despite that, for many producers, the 2020 presidential election did not turn out the way they hoped.

The latest DTN/The Progressive Farmer Agriculture Confidence Index is 145.9, up 52 points from August though down 18.2 from the same period at the end of 2019.

Farmers responding to the DTN/Progressive Farmer telephone survey answered 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 both their "present situation" and their "future expectations." Those numbers are combined to create the overall Agriculture Confidence Index.

Numbers above the baseline of 100 indicate optimism -- the higher the number, the higher that optimism. Scores below 100 are considered pessimistic.

The latest survey was conducted Nov. 17-30, with calls going out to at least 500 farm and ranch operators. DTN and The Progressive Farmer conduct the index three times each year: early spring before planting, late summer just prior to harvest, and just before the end of the year, during tax preparation time.

This year, the survey included questions about the 2020 election. That made for a slight delay in the survey as the nation waited for presidential results to be finalized. Some 92% of farmers surveyed said they cast a ballot in the presidential election. Of those, 62% said they voted to reelect Donald J. Trump, while 11.8% said they voted for Joseph R. Biden Jr. That split came as little surprise, as historically farmers have supported the 45th president.

Somewhat surprising is that 26.3% of farmer respondents chose to not reveal their vote. Survey callers reported a general sense of polling fatigue when it came to politically related questions, with farm operators preferring to either not answer or move on to other subjects. There also has been some support among farmers and rural citizens for theories that the 2020 election was fraudulent, potentially leading to an unwillingness to discuss the subject. A number of fraud and voting irregularities have been claimed by the Trump campaign and the president. To date, those have been determined to be without merit, with Trump ally and Attorney General William Barr announcing recently that no signs of significant fraud had been found by federal investigators.

Farmers were also asked about a series of reasons they voted for their candidate. Issues such as the candidate's views on support payments, personality, and the nation's perceived standing in the world received the bulk of the "most important" reason of those listed in the question. However, the largest reason, getting 26.7% of responses, was "other." Survey takers reported a multitude of reasons farmers chose the "other" category, from positions on abortion, a vote more against the other candidate than for their choice, to more specific economic and social policy points.

OPTIMISM FOR 2021

When asked how they feel about the present, farmers are greatly more optimistic than prior to harvest. The survey's present situation score was up a whopping 131 points from the record-low 46.9 in August. Future expectations continued on the optimistic side, with a rating of 129.1, up slightly from August but down 62 points from the 191 of a year ago.

Regionally, the Midwest had the highest overall Agricultural Confidence Index at 164.2. The Southeast and Southwest were next at 122.1 and 118.2, respectively. Also of note regionally was that the Midwest and Southeast had significantly higher present situation numbers, at 180.2 and 208.7, respectively, while the Southwest farmers put their present conditions at a 144.4. The Midwest also once again had the highest future expectations score, at 153.2, compared to the more baseline 106.7 in the Southwest and slightly pessimistic 90.3 for the Southeast.

Looking at farmers' attitudes in relation to the operations they run, survey respondents who identified as mostly crop producers reported an ACI of 149.2, up a significant 61.7 points from August and down 18.5 from a year ago. Livestock producers recorded an index of 139.9, up 33 from August and down 18 from December 2019.

USDA this week reported farm incomes are expected to be the highest in seven years with a large increase in crop-related income due to government programs to offset the pandemic and other trade issues. For DTN's full story on that, see https://www.dtnpf.com/….

Prices for corn, soybeans and some other commodities have also turned steeply upward compared to pre-harvest levels in August. This may be putting some pre-holiday shine on what was otherwise a troubling 2020.

The DTN National Corn Index is at $4.08 as of Dec. 3 versus $2.95 at the end of July, as the August Confidence Index survey was taking shape. DTN's National Soybean Index is at $11.20 versus $8.45 at the end of July and the DTN National HRW Wheat Index is at $5.22, instead of $4.23.

"In the case of corn and soybeans, not only are prices higher, but they are the difference between making money farming and not making money," said DTN Lead Analyst Todd Hultman. "That's no small point after at least five years of chronic grain surpluses and low prices."

It is also unusual for farmers to see high prices at harvest time that weren't the result of a ruined crop, Hultman said. "Harvests were dry, propane costs were minimal and harvest prices were high enough that farmers didn't need to store grain if they didn't want to. The 2020 harvests weren't record crops, but they were good yields for most. The higher prices were largely the result of unexpected demand from China," he said.

HISTORICAL DIFFERENCES

A key reference point for surveys such as the Agriculture Confidence Index is that they show a sliver of time; the index numbers are relative to all the things going on around the farm industry and the global economy in general. There's no better example of that than to look back at November 2016, when the so-called "Trump bump" following that presidential election saw the Index jump 72 points compared to the pessimism of August that year.

Still, that "bump" Index of November 2016 was a neutral 98, nearly 50 points below the 2020 score.

AGRIBUSINESS SENTIMENT

In addition to its survey of farmers, DTN/Progressive Farmer also conducts a similar query of at least 100 ag retailers for the DTN/The Progressive Farmer Agribusiness Index. The overall Index for November is 110.4, up from August's 97.9, and a high for 2020. The current level is also up from a year ago when the index was 100.5. This is the highest agribusiness score since March of 2017, which was 110.

The agribusiness survey was conducted Nov. 17 through Dec. 2.

The next DTN/The Progressive Farmer Agriculture Confidence Index survey will be conducted in April, just as planting begins to ramp up. You can hear more about the Index and related subjects on our Field Post podcasts and our Reporter's Notebook video segments, both which can be found here: https://www.dtnpf.com/….

Greg D. Horstmeier can be reached at greg.horstmeier@dtn.com

Follow him on Twitter @greghorstmeier

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