(West Lafayette, IN) - Farmers are not as optimistic about future profit margins if Donald Trump is no longer in The White House.
That’s according to the latest Purdue University/CME Group Ag Economy Barometer down by an
overall 16 points from a record high 167 on a scale of 200 points in October.
CME Group is one of the largest options and futures exchanges out of Chicago.
The Ag Economy Barometer is calculated each month from the responses on the phone by 400 U.S. agricultural producers.
The latest survey was taken after the November 3 election being challenged by Trump alleging widespread election fraud.
The overall economic outlook by farmers was improved immediately after Trump was elected president in 2016.
“Elections do matter. That’s for sure,” said Michael Langemeier, an agricultural economist for
Purdue University at the West Lafayette campus.
According to the report, future expectations by farmers over the next five years dropped 30 points from the previous month’s survey.
However, the view of producers about current economic conditions supported by the ongoing rally in commodity prices and CFAP-2 payments rose by 9 points to an all-time high of 187 points.
The federal payments helped offset the losses of producers from a five-percent or greater national price decline caused by COVID-19.
The November survey also revealed farmers if democrat Joe Biden is president expect a tightening of environmental regulations impacting agriculture and higher income tax rates for farms and ranches.
Responding farmers under a Biden presidency also anticipated higher estate tax rates on farms and ranches; less government support for the U.S. ethanol industry and a weakening of the federal farm income safety net.
Specifically, the number of farmers believing environmental regulations will tighten without Trump in The White House increased from 41-percent to 77-percent.
66-percent of respondents expected higher income tax rates compared to 35-percent in October due to the results of the election.
The increase was similar on the number of farmers anticipating higher estate tax rates.
Under a Biden administration, the number of producers suspecting a decline in government support of the U.S ethanol industry and farm income safety net programs nearly doubled from
17-percent and 18-percent respectively from the previous month.
The November barometer also found record low expectations for the trade war between the U.S. and China under a Biden presidency.
A favorable resolution for U.S. agriculture was anticipated by 50-percent of the respondents, down from 80-percent in January and February.
The number of farmers expecting China to fulfill the Phase One Trade Agreement dropped to 44-percent from 59-percent in October.
The survey also showed the amount of farmers expecting to reduce machinery purchases over the next 12 months increased by seven points from 33-percent the previous month.
Langemeier said the overall score is still among the highest since the monthly surveys began in late 2015 when the farm economy was early into a long running slump.
The economic recovery this year helped offset some of the future pessimism.
“I’m not surprised the sentiment is as strong as it is. If you look at the prices, the revenue and the net farm income it is better in 2020 than at any time during the life of our survey,” Langemeier said.