Optimism Dries Up, Along With U.S. Farmland

September 11, 2012

Our nation’s farmers are less optimistic about their circumstances than they were in March, according to a recent survey published by DTN/The Progressive Farmer.

Some high (and some low) lights from the survey report that, based on a benchmark rating of 100:

– Current conditions are considered to be 120.4, down from 140.2 earlier this year.
– Expectations for a year from now registered at 98.2, up from 87.4.
– In a separate survey, agribusinesses rated conditions at 112.2 and projected them to be at 80.5 a year from now, both down from February.

*Benchmark rating of 100, which is considered neutral, was set in 2010 when the analysis began.

That farmers are feeling less optimistic about the existing conditions is no surprise, given that widespread drought continues to suffocate crops and livestock nationwide. According to the most recent U.S. Drought Monitor issued September 4, 63 percent of the lower 48 states are still experiencing moderate to exceptional drought, and 42% of those states’ conditions are considered “severe, extreme or exceptional.”

But Katie Micik, an analyst with DTN, notes that some optimism remains, largely because of the strength and reliability of the U.S. crop insurance program. “Farmers are saying, ‘I’ll be OK, I can plant another crop.’”

Farmers have already invested more than $4 billion in crop insurance policies this year, resulting in $116 billion in liability protection and $1.3 billion in indemnity checks for those who have already suffered losses.

“Weather also remains a concern for businesses and farmers, Micik said in an interview with Bloomberg News. “They’ll be a whole lot more optimistic if they get rain.”

Not to mention if their safety net remains strong.

The report is based on two surveys, one of 500 farmers and another of 100 agribusinesses, conducted in mid-August.