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Farmland Forecast

RSS By: Marc Schober, AgWeb.com

Marc Schober is the editor of Farmland Forecast an educational blog devoted to investments in agriculture and farmland.

Rural Economy at Four Year High

Apr 28, 2011

The rural economy soars to its highest level in nearly four years as rising farmland values, recovering employment market, and improving banking conditions have improved to the rural economic outlook.

The overall Rural Mainstreet Index (RMI) improved to 59.4 from 56.7 in March, according to the survey of bank CEOs in a 10-state region. This marks the sixth straight month the index is above growth neutral 50.0 and well above the reading of 44.2 last April.

Farmland Forecast   2011 RuralMainstreetIndexFarmlandForecastColvinSchober1

“Higher oil prices have yet to derail or even slow the pace of growth for the Rural Mainstreet economy.” Goss and Bill McQuillan, CEO of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005,” said Creighton University economist Ernie Goss, co-author of the report.

Agriculture

Farmland prices continue to see record prices as the farmland index remained above growth neutral for the 15th straight month. The farmland index increased to 77.6 from March’s 75.0 and well above last April’s 59.6. Bankers continue to expect strong farming conditions, but are concerned about rising crop expenses.

Farmland Forecast   2011 FarmlandForecastPriceIndexGreysonColvin1

The farm equipment sales index declined slightly to 74.2 from 75.9 in March, but still displaying strength in the farming sector. “Firms linked to agriculture or energy are experiencing very healthy growth and growth prospect. On the other hand, Rural Mainstreet companies that are not tied to the farm economy continue to experience very little growth,” said Goss.

Banking

Loan volumes improved in April to 58.1 from a reading of 47.1 in March due to seasonal loan demand. Checking deposits declined to 65.5 from 68.7 in March, but certificate of deposits increased to 48.5 in April from 45.5. Bankers also noted they expect mortgage rates to increase 0.5% to 1.5% by the end of 2011.

The rural economy continues to add jobs for the fifth straight month as the jobs index increased to 56.9 in April from March’s 56.2. “Rural areas are outpacing the urban areas in terms of job growth. However the gap between urban and non-urban is closing,” said Goss.

Rural bankers continue to expect sustainable growth over the next six months in the rural economy, although the economic confidence index declined to 61.0in April from March’s reading of 65.2 as the tragic events in Japan and budget concerns in Washington weighed on banker’s outlook.

Outlook

The rural economy continues to lead the way as the global economy continues to improve. Unexpected economic challenges will continue to cause some bumps in the road, but strong farm income and farmer spending will keep the rural economy steaming ahead.

For daily articles on farmland and agriculture, visit http://farmlandforecast.colvin-co.com.

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