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The barometer of the agricultural economy remains solid; producers concerned about possible changes in inheritance tax policy

By on May 4, 2021 0

May 4, 2021

The barometer of the agricultural economy remains solid; producers concerned about possible changes in inheritance tax policy

The agricultural economy barometer shows good prospects, but concerns. (Purdue / CME Group Agricultural Economics Barometer / James Mintert)
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WEST LAFAYETTE, Ind. And CHICAGO – The Purdue University / CME Group Agricultural Economics Barometer was virtually unchanged in April, up one point from March to 178. Producers are increasingly optimistic about the future.

The Future Expectations Index continued its uptrend from last month, up 5 points to a reading of 169. However, their views on current conditions have slipped. The current conditions index fell 7 points in April to 195. The Farm Economy Barometer is calculated monthly based on responses from 400 US farm producers to a telephone survey. This month’s survey was conducted from April 19 to 23.

“Strong commodity prices continue to boost expectations for strong financial performance, even as many see input costs rising,” said James mintert, Principal Investigator of the Barometer and Director of the Commercial Agriculture Center at Purdue University.

The agricultural financial performance index hit a record high in April, up 13 points from March to 138, 83 points higher than a year ago. This month, 50% of producers said they expected better financial performance in 2021 compared to 2020, up from 39% who thought so in March. Despite expectations regarding the good financial performance of their farms, farmers were less inclined to think that the time had come to invest heavily in buildings and equipment than they were in March. However, in a follow-up question, when asked more specifically about their farm machinery investment plans, more producers in April said they plan to increase their farm machinery purchases than in March.

“The discrepancy between the two answers could reflect skyrocketing construction costs and the difficulty in planning construction projects across the United States,” Mintert said.

Possible changes in US tax policy are on the minds of agricultural producers. Ninety-five percent of respondents are somewhat or very concerned that changes in tax policy will make it more difficult to transfer their farm to the next generation. Eighty-seven percent expect capital gains rates to increase over the next five years. Three-quarters said they were “very concerned” about the possible elimination of the increase in the cost base of farmland in inherited estates and just over two-thirds (68%) of respondents said they were “very concerned” by a possible reduction. in the inheritance tax exemption for inheritance.

Farmers expect the rise in farmland values ​​to continue unabated over the next year, with the near-term farmland value expectation index hitting a record low of 159. or 11 points more than a month earlier. Producers were less optimistic, however, when asked about the 5-year outlook for farmland values, as the long-term farmland value expectations index fell 9 points in April to settle. to 148.

“The difference between the short-term and long-term expectations of producers could indicate that they are concerned that the rapid increase in the value of farmland that we are seeing is not sustainable in the long term,” Mintert explained.

With COVID-19 vaccinations widely available in the United States, attention is now focused on the percentage of the American population who do not plan to be vaccinated. To learn more about the vaccination plans of commercial agricultural producers and compare them to the U.S. population as a whole, the survey asked producers about their vaccination plans since October 2020. The percentage of producers reporting “they don’t plan to get vaccinated ”rose from a high of 37% in October to 28% in January and has fluctuated between 28% -32% since then.

Monmouth University polls in January, March and April indicate that 21-24% of American adults “will likely never get the vaccine,” while a February Pew Research Center poll indicated that 30% of adults Americans would “probably” or “definitely” not get the COVID-19 vaccine. Comparing the results of this month’s survey to these larger population surveys suggests that the reluctance to be vaccinated against COVID-19 among U.S. agricultural producers mirrors that of the larger population of all U.S. adults.

After a hiatus of almost a year, more farm days, workshops and in-person educational events are planned for 2021. During the March and April barometric surveys, we asked producers if they were more or less likely to participate in these programs than they were in 2020. Responses were mixed. Just over 70% of respondents said they were more likely to attend in-person events this year, but 28-35% of producers said they were less likely to attend in-person events . For program planners, this implies the need to offer programs in a hybrid or virtual format to reach the large audience of commercial agricultural producers.

Read the whole Agricultural economy barometer report. The site also offers additional resources – such as past reports, charts, and survey methodology – and a form to sign up for monthly Barometer email updates and webinars.

Each month, the Purdue Center for Commercial Agriculture offers a short video analysis of barometer results, available, and for even more information, consult the Purdue Commercial AgCast Podcast. It includes a detailed breakdown of each month’s barometer and a discussion of the latest farm news that impact farmers.

The Agricultural Economy Barometer, Current Conditions Index and Future Expectations Index are available on the Bloomberg Terminal under the following ticker symbols: AGECBARO, AGECCURC and AGECFTEX.

About the Purdue University Center for Commercial Agriculture

the Commercial Agriculture Center was founded in 2011 to provide professional development and education programs to farmers. Based within the Department of Agricultural Economics at Purdue University, the centre’s faculty and staff develop and execute research and educational programs that meet the various management needs in today’s business environment.

About the CME group

As the world’s leading and most diverse derivatives market, CME Group (www.cmegroup.com) enables clients to trade futures, options, liquidity and over-the-counter markets, optimize portfolios and analyze data – enabling market participants around the world to effectively manage risk and to seize opportunities. The CME group exchanges offer the widest range of global benchmark products in all major asset classes based on interest rate, stock market indices, exchange, energy, agricultural production and metals. The company offers futures and options on futures contracts through the CME Globex®, bond trading via BrokerTec and currency trading on the EBS platform. In addition, it operates one of the world’s leading providers of central counterparty clearing, CME Clearing. With a range of pre- and post-trade products and services underpinning the entire life cycle of a trade, CME Group also offers optimization and reconciliation services via TriOptima and trade processing services via Traiana.

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Writer: Kami Goodwin, 765-494-6999, [email protected]

Source: James Mintert, 765-494-7004, [email protected]

Media contacts:

Aissa Good, Purdue University, 765-496-3884

Dana Schmidt, CME Group, 312-872-5443

Related websites:

Purdue University Center for Commercial Agriculture

CME Group

Agricultural communications: (765) 494-8415;

Maureen Manier, Head of Department, [email protected]

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