Strong Dollar Curbs Rural Economy

 
Strong Dollar Curbs Rural Economy

Rural Mainstreet Index finds bearish farmland prices, sluggish equipment sales 

W hile they are bearish on farmland prices, bankers see higher cash rents, according to the most recent 
survey of rural bank CEOs and presidents conducted by Creighton University’s Ernie Goss. The monthly Rural Mainstreet Index tracks financial indicators across a 10-state region from Colorado to Illinois. 

Goss found the farmland and ranchland price index sank to 33.4 in April, down from March’s very weak 39.4. (50 is considered growth neutral).

“Even through crop prices have stabilized, demand for farmland was weak, pulling agricultural land prices down again,” Goss says. “This is the 17th straight month the index has moved below growth neutral.” 

Even through farmland prices continue to decline, expected cash rents for non-irrigated cropland continue to rise, according to the survey. In January, the bankers surveyed estimated 2015 cash rent would average $214 an acre. The most recent survey pegged the average at $227.

“With GPS-based yield mapping, we are seeing some of the smarter operators starting to figure out which land is making them money and which is not,” says Todd Douglas, CEO of First National Bank in Pierre, S.D. “So far when someone walks away from poorer ground, there still seems to be a greater fool ready to rent it.”

The April farm-equipment sales index increased to a frail 15.6 from March’s record low of 15.2. The index has been below growth neutral for 21 straight months. “With farm income expected to decline for a second straight year, farmers have become cautious regarding the purchase of agricultural equipment,” Goss notes.

The overall Rural Mainstreet Index, which ranges between 0 and 100, climbed to 46 in April, up from 43.6 the previous month. 

“The stronger U.S. dollar continues to be a drag on the rural mainstreet economy,” Goss says. “This month, 34% of the bank CEOs reported the strong U.S. dollar was having a negative impact on their local economy. Gains in the U.S. dollar have made U.S. goods, especially agricultural and energy products, less competitively priced abroad.”  

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Comments

 
Spell Check

PullMyFinger
Chappell, NE
4/22/2015 09:12 AM
 

  When bankers start producing something and paying property taxes then let's give a damn what they think.

 
 
ksswede@gmail.com
Weskan, KS
4/21/2015 08:16 AM
 

  Well, duh...

 
 

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