US election casts shadow on farmer sentiment

Farmer sentiment plunged in November in the aftermath of the US general election on growing expectations of stringent environmental regulations, higher taxes and less government support.

Purdue University's monthly agricultural barometer, which gauges farmer outlooks for current and future market conditions, fell by 16 points from October to 167, 9pc lower than two weeks preceding the general election.

The month-to-month decline was fueled by worsening market outlooks for the next five years stemming from a reaction to President-elect Joe Biden's general election victory over President Donald Trump.

An overwhelming share of surveyed farmers anticipate stricter environmental regulations impacting operations, higher income and estate taxes for farms and ranches, reduced federal support for the domestic ethanol industry — which would sever a major revenue stream for corn growers — and a weakened government aid program.

President Trump's term has been defined by record federal aid support for the domestic agricultural sector, restructured trade agreements with China, Canada and Mexico, and relaxed environmental regulations, such as redefining the Waters of the US (WOTUS) rule in April.

As confidence in future conditions eroded, so did expectations for a favorable outcome in the phase one agreement with China.

Half of the farmers surveyed — the lowest level since Purdue gauged farmer outlooks on the trade agreement in summer 2019 — expect a favorable outcome for US agriculture. Fewer than half expect China to fulfill its requirements laid out under the agreement.

Perception of current market conditions, though, improved from October — reaching a record high 187 on Purdue's index.

Farmers have benefited from a three-month rally in grain prices, recovering livestock and dairy markets and a steady stream of government payouts under the second installment of the US Department of Agriculture's Coronavirus Food Assistance Program.

By Connor Hyde