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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