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RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 35 years.

Banker Survey Uncovers More Slowing in Farmland Rise

Jun 20, 2013

Mike Walsten

The strength in farmland values continues to ease, according to the monthly survey of rural bankers across 10 Midwestern states conducted by Dr. Ernie Goss, Creighton University. The farmland index included in the Rural Mainstreet Index (RMI) declined for the sixth time in the past seven months, Goss found. The index decreased to 58.4 from 62.1 in May with 50 considered "growth neutral."

"Our farmland price index has been above growth neutral since February 2010. However we are tracking a clear downward trend in farmland price growth. I expect that growth to continue to fall as the U.S. dollar strengthens and agriculture commodity prices weaken," said Goss.

"This downward trend in agriculture commodity prices has softened the growth in both farmland prices and farm equipment sales," said Goss. After expanding by almost 9% for 2012, farm product prices have been flat for 2013 and while the farm equipment sales index expanded for June to 53.2 from May's 52.4, sales are softer than earlier in the year."

The rural economy, meanwhile, continues to improve, his monthly review finds. The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to 60.5 from May's 58.8. "This year's healthy rainfall for much of the area has boosted growth over the past several months compared to the same period last year," says Ernie Goss

The confidence index, which reflects expectations for the economy six months out, increased to 60.0 from 54.5 in May. "Consistent and positive growth in the national economy, along with improving crop conditions, are boosting bankers' economic outlook," says Goss.

The Senate Farm bill cuts about $4.1 billion in food stamps over the next decade. "According to our June survey, 56.6 percent of bank CEOs think the cuts are too small," reported Goss.

Each month, community bank presidents and CEOs in nonurban, agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

This survey represents an early snapshot of the economy of rural, agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, president of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.

 

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COMMENTS (1 Comments)

Tom in Desert - Palm Desert, CA
That farmland prices would taper off is no surprise. The rise has been mostly the result of Fed policy that has driven down Savings Interest to nearly Zero.

However, that "56.6 percent of bank CEOs think" that ANY, let alone the proposed "about $4.1 billion" cuts "in food stamps (SNAP) over the next decade "are too small" is very scary.

This survey finding means that a strong majority of local bank CEOs do not understand basic concepts of Local/Regional Economics, let alone those of sovereign nation MacroEconomics. And, they are the ones we thought we could count on to help boost our Local Economies!

These ignorant bankers, first of all, fail to realize that all SNAP benefits help boost the Commodity prices their Ag Customers receive, which result in larger On-hand Deposits and greater Local Consumer Spending by their Customers, which in turn greatly expands their Local Economies.

They fail to understand that in the larger National Economy, destroyed by VooDoo Economics of nearly all of the past 32 years, concurrent with the Insane "De-Regulation" of many Sectors, especially the Financial Services Sector, that allowed many Bubble Burst recessions and Recessions over the "Aughts' ultimately resulting in this Great Bush Depression with its Mass Un-Employment of another 18 Million Americans, the Critical Need is for an expansion of the SNAP program. Not a contraction!

They fail to understand what a guy, who has made a lot more Money than they ever will, Vice-President Dick Cheney, famously observed nearly a decade ago, "Deficits don't matter".

They fail to understand that hungry people will NOT Starve. They will find a way to get the money they need for Survival. Since there are no Jobs for the approximately 27 Million still Un-Employed because of Congressional hyper-partisanship, that means many will turn to drug dealing, burglarizing, vandalizing, thieving, and the rest.

The about $4.1B in SNAP cuts these ignorant bankers think are insufficient could well mean a Gross Societal Expense of $80B to $100B to replace the "stuff" stolen or the aftermath of drug dealing. OR, maybe that is what this "56.6%" of Local bankers are counting on??

It is simple Economics and Math.
8:22 AM Jun 24th
 
 
 
 
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