Rural Bankers Say Low Commodity Prices Their Biggest Challenge

Published on: 15:55PM May 19, 2016

Mike Walsten

Nine out of 10 rural bank CEO's rate low commodity prices as the biggest challenge to their rural economy for 2016, according to this month's Rural Mainstreet Index (RMI) survey conducted by Dr. Ernie Goss, Creighton University. The May reading saw the RMI increase from April's very weak reading, Goss states, rising for three of the past four months. The index, which ranges between 0 and 100 with 50 considered growth neutral, rose to 40.9 in May from April's 38.2.

"This is the ninth straight month the overall index has remained below growth neutral. Even though agriculture and energy commodity prices have increased recently, they remain well below prices 12 months earlier and from their peak levels in 2011. Farm prices are down by 17% and grain prices are off by 49%," observes Goss.

The farmland and ranchland-price index for May climbed to 28.4 from April's 26.7. This is the 30th straight month the index has moved below growth neutral.

The May farm equipment-sales index sank to a dismal 10.7 from 11.1 in April. "Weakness in farm income and low agriculture commodity prices continue to constrain the sale of agriculture equipment across the region. Reductions in farm prices have negatively affected local agricultural equipment dealers and regional manufacturers of farm equipment," he said.

The Rural Mainstreet Index surveys community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area, ranging from Colorado/Wyoming to Illinois and North Dakota/Minnesota to Kansas/Missouri.

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