Bankers Expect a Double-Digit Drop in Cash Rents

 
Bankers Expect a Double-Digit Drop in Cash Rents

The Creighton University Rural Mainstreet Index (RMI) brought more than a few revelations from bankers surveyed in 10 Midwestern and Mountain states.

For starters, cash rents is expected to take a double-digit dip, dropping 16% in 2014, from an average of $254 to $214.

“Cash rents are down $25 to $50 in some cases, but many are closer to what they were last year,” says James Brown, CEO of Hardin County Savings Bank in Eldora, Iowa. “If commodity prices stay in this range, there will be more significant decreases next year.”

Much weaker crop prices continue to take “air out of the bubble” in farmland prices, adds Ernie Goss, chair of regional economics at Creighton University.

Other insights from the survey include:

  • Farmland prices went down for the 14th consecutive month.
  • About 71% of bankers say lower oil prices are not affecting ethanol production in their area.
  • About half of bank CEOs surveyed say regulatory costs is the biggest threat to banks in 2015.

Overall, the RMI, which ranges from 0 to 100, was 50.9 for January, which was slightly up from December’s 50.0 ranking. The confidence index (which measures expectations for the economy six months out) also increased, from 42.5 in December to 43.6 in January.

“[However], much weaker crop prices and declines in energy prices have negatively affected the outlook of bank CEOs in energy- and agriculture-dependent portions of the region,” Goss says.

Creighton determines the RMI each month by bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. By focusing on approximately 200 rural communities with an average population of 1,300, Creighton says the RMI the most current real-time analysis of the rural economy.

Click here for state-by-state survey results.

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Comments

 
Spell Check

Mike
LaCrosse, IL
1/21/2015 05:15 AM
 

  I'm waiting for the headline to say "Bankers Expect Double Digit Price Reductions from John Deere, Monanto, & Pioneer!"

 
 
jimbob
Primghar , IA
1/20/2015 04:51 PM
 

  No changes here. If you don't pay, someone else will.

 
 
bill crowe
darlington, IN
1/20/2015 09:44 PM
 

  pay same as last or leave'

 
 

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