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Rural Bankers See Bearish Picture for Farmland Prices

09:00AM Oct 19, 2018
Chrysanthemum

Farmland prices have declined by 4% in the past 12 months, according to Creighton University’s Rural Mainstreet Index (RMI) for October 2018. The farmland and ranchland-price for October sank to 34.8 from 37.5 in September. This is the 59th straight month the index has fallen below growth neutral 50.

Future farmland values look to be just as bearish, according to the monthly survey of bank CEOs in a 10-state Midwest region. The bankers expect farmland prices to fall by another 3.2% over the next 12 months.

“More than ever, farmland values are extremely dependent upon quality, and location, location, location,” says Fritz Kuhlmeier CEO of Citizens State Bank in Lena, Ill.

In spite of waning farmland values, the rural economy is still in growth mode. The overall index expanded to 54.3 from 51.5 in September. This is the ninth straight month the overall index rose above growth neutral.

“Our surveys over the last several months indicate that the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector,” says Ernie Goss, who chairs Creighton’s Heider College of Business. 

Borrowing by farmers contracted for October as the loan-volume index declined to 60.0 from 65.3 in September. 

The employment gauge climbed to 65.7 from September’s strong 65.3. The Rural Mainstreet economy is now experiencing healthy job growth. Over the past 12 months, the Rural Mainstreet economy added jobs at a 1.6% pace compared to a lower 1.5% for urban areas of the same 10 states.
  
Meet the man behind the Rural Mainstreet Index: Ernie Goss.