World: Pessimism about future grows in agribusiness

06.11.2013

The Agri-marketer Confidence Index is patterned after the Consumer Confidence Index and asks five questions of a cross-section of agri-marketers in both the crop and livestock sectors. The questions ask agribusiness professionals’ perceptions of both the current business conditions for their own company and the farmers and ranchers who are their customers.

When asked in mid-October to assess whether conditions for their own agriculture-based company will be better worse or the same in the future, one-quarter of surveyed agri-marketers said they expect conditions will be worse for them. That’s compared to just 7 percent who saw a worse future ahead in March.

Some of those people may be concerned about grain prices, which are dropping due to the size of the corn crop and ramped up production in other countries, said Nathan Smith, an agriculture economist with the University of Georgia.

“The expectations are that prices are doing to be lower next year” due to a larger than expected corn crop, Smith said. “Futures prices are bearish right now, and that’s just the overall tone of the season.”

Agri-marketers also saw some rough times ahead for farmers and ranchers. One-fifth believe business conditions are negative for producers today and 35 percent think that business conditions will get worse.

The end of 2013 comes with a lot of uncertainty. Several October reports from USDA were delayed or canceled due to the federal government shutdown, leaving some yield information incomplete. Lawmakers continue to work on the Farm Bill (which expired Sept. 30) and immigration reform and are approaching another budget negotiation.

Still, the lack of confidence in the business climate for agriculture isn’t new. The ACI survey is conducted three times a year, and Tuesday’s low confidence mirrors the answers given in March 2010. Over the next several months, confidence climbed and climbed to a peak in January 2012 before beginning to drop.

The optimism then had a lot to do with high corn prices, Smith said.

“We were coming off a somewhat slow year, and a lot of people were going up pump up corn acres,” he said.

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