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RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 40 years.

Creighton Survey Finds Still-Healthy Rural Economy

Jan 21, 2013

Mike Walsten

The rural Midwest economy continues to remain healthy, indicates the monthly survey of 10-Midwestern bank CEOs conducted by Creighton University economist Dr. Ernie Goss. After declining during the summer drought, the rural Mainstreet economy in January remained above growth neutral for a fourth straight month, he says.

The Rural Mainstreet Index (RMI). which ranges between 0 and 100 with 50 representing growth neutral, dipped to a still solid 55.6 for January from December's healthier 60.6. Over the past three years, the RMI has averaged 55.8. "Our survey results indicated that the rural mainstreet economy continues to expand at a moderate pace. Rural, agriculturally dependent communities in the region appear to have shed the negative impacts of the 2012 drought," observes Goss.

However, some bankers expect the national economy to weigh on the region. According to Dale Bradley, CEO of The Citizens State Bank, Miltonville, Kan., "A downturn in the overall economy will also affect our farm economy. I expect both to be negative in 2013." Likewise, Jim Eckert president of Anchor State Bank, Anchor, Ill., reports small town businesses are signaling that the recession is not over.

Farmland: After rising above 80 for two straight months, the farmland-price index slumped to a still-healthy 71.5 from December's 82.5 and November's 83.9. This is the 36th consecutive month that the index has risen above growth neutral. The farm equipment-sales index declined to a solid 63.8 from 67.0 in December. "Despite continuing drought conditions in much of the region, growth in farmland prices, cash rents and farm equipment sales remain strong," says Goss.

This month bankers were asked the impact of continuing drought conditions on rural mainstreet economy. "Contrary to my expectations, more than 60% of bankers anticipate only a moderate negative to no impact if the drought continues for 2013. Furthermore, approximately 80% of bank CEOs report the drought has had no impact on farmland prices," notes Goss.

When asked about sustaining economic damages from a continuation of the drought for 2013, 50.8% expect livestock producers to be the most negatively affected. Approximately 38% of the bankers anticipate that crop farmers will sustain the largest negative impacts. Approximately 11% expect business linked to agriculture and ethanol producers will experience the most negative impacts of a 2013 drought.

The monthly survey represents an early snapshot of the economy of rural, agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index covers 10 regional states from Colorado to Illinois focusing on approximately 200 rural communities with an average population of 1,300.

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

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