WESTERN PRODUCER — Optimistic farmers plan to expand their farms.
Pessimistic farmers don’t, at least not by much. Some plan to get out of the industry.
According to analysis by Michael Langemeier and James Mintert of the Centre for Commercial Agriculture at Purdue University, “it is clear that the farm operations who expect to expand are much more optimistic than operators who expect their farm’s size to hold steady or decline.”
It’s not shocking to find that those who think the future looks good are more likely to want to expand than those who see the future more glumly, but exactly why the future looks so different to different producers isn’t clear.
“We don’t have a clear-cut answer,” said Langemeier and Mintert in an analysis piece based upon the Ag Economy Barometer compiled monthly by Purdue and the Chicago Mercantile Exchange.
“One possibility is that, in addition to perhaps not having identified a successor, farm operations that plan on reducing or staying the same size may not be able to expand due to liquidity or solvency issues. Or perhaps they simply think that the next five years will not provide a good environment to expand their operations.”
The Barometer is designed to survey American farmer sentiment each month and compare it to trends and the base period in 2015-16. In February, it asked farmers about their long-term plans and compared this to their attitudes about the outlook for farming.
About half of the respondents said they either planned to stay the same size or get out of the industry, about 40 percent expect moderate growth of less than 10 percent per year, while 10 percent expect growth of 10 percent or more per year.
The number of farmers who don’t plan to expand has stayed constant for years.
Farmers who plan to expand most aggressively are also the most optimistic, the survey found.
“Farm operators who expect to grow in the next five years are relatively more optimistic about both current and future prospects for production agriculture than operators who expect their farm’s size to remain unchanged or decline.”
