June 13, 2016
Ag Economy Barometer
Recently Purdue’s Center for Commercial Agriculture, in a partnership with the CME Group, launched the Purdue CME Group Ag Economy Barometer. The Ag Economy Barometer is designed to fill an information void regarding the overall health of the U.S. farm economy and is analogous to publicly available indices focused on the broad U.S. economy, such as the University of Michigan’s Consumer Sentiment Index.
The Barometer is based on a monthly telephone survey of 400 U.S. agricultural producers and is designed to learn more about farmers’ attitudes and sentiments regarding the status of the U.S. farm economy. Farmers across a broad spectrum of agricultural enterprises are surveyed. Their responses are weighted based upon the USDA’s Census of Agriculture to ensure that survey responses are representative of the entire farm sector.
The key agricultural enterprises in each month’s survey include the following: corn/soybeans, wheat, cotton, beef cattle, dairy, and hogs. These enterprises collectively account for two-thirds of all U.S. agricultural production. In each survey, we target a distribution of farms across these key enterprises. Then we ensure a portion of responses come from each production enterprise. Those survey portions are 53% corn/soybeans, 14% wheat, 3% cotton, 19% beef cattle, 5% dairy, and 6% hogs.
Specifically, responses to five questions are used to generate the Ag Economy Barometer value each month. The questions are:
- Would you say that your operation today is financially better off, worse off, or about the same compared to a year ago?
- Looking ahead, do you think that a year from now your operation will be better off financially, worse off, or just about the same as now?
- Turning to the general agricultural economy as a whole, do you think that during the next twelve months there will be good times financially, or bad times?
- Looking ahead, which would you say is more likely; U.S. agriculture during the next five years will have widespread good times or widespread bad times?
- Thinking about large farm investments – like buildings and machinery — generally speaking, do you think now is a good time or bad time to buy such items?
INTERPRETING THE AG ECONOMY BAROMETER VALUES
Responses to these five questions are used to calculate the index value each month. Data was collected monthly from October 2015 through March 2016 to establish a base period for the Barometer and each month the Barometer value provides a comparison of farm sector economic conditions with the six-month base period. For example, a Barometer value of 100 implies conditions were unchanged compared to the base period whereas values greater than or less than 100 indicate an improvement or deterioration in farmers’ sentiment, respectively, compared to the October 2015- March 2016 base period
The Ag Economy Barometer will be published the first Tuesday of each month. If you are interested in learning more about the Ag Economy Barometer, visit our website, www.purdue.edu/agbarometer where you can also register for email updates when the Ag Economy Barometer is published.