Trade wars, following prices cause Ag Economy Barometer to biggest ever monthly fall

The survey asked 400 agricultural producers whether they expect their net income to decline as a result of trade conflicts. More than two-thirds of respondents said yes.

Among those who expect their net income to decline, the survey found that more than 70 percent expect their net income to decrease by at least 10 percent, with 35 percent saying they their incomes could fall by more than 20 percent. The survey only posed this question to respondents who said their farm incomes will likely fall as a result of tariffs.

More than half of respondents in July believe a trade war that significantly harms agricultural exports is likely. The survey has asked this question three times in the last six months. The number of farmers who replied affirmatively has increased from 46 percent in March to 54 percent last month.

Commodity prices also ranked high in producers’ negative outlook in the July report.

“Approximately 4 out of 10 producers in this month’s survey stated they think it’s likely corn futures will trade below $3.25 per bushel and soybeans will trade below $8.00 per bushel,” the report said. “For both corn and soybeans, prices at those levels would cover variable expenses on nearly all Corn Belt farms but would fall short of covering fixed and overhead expenses, resulting in a significant cash flow squeeze for many farm operators.”

Relatedly, about 30 percent of farmers in the July survey expect lower farm prices within the next 12 months and 73 percent of survey respondents said now is not a good time for large investments.

But the longer-term economic outlook among producers was neutral: Forty-seven percent of respondents in July said they expect good financial times over the next five years, while only 32 percent expect bad financial times in the same period.