Bankers Remain Negative on Farmland Values
Nov 19, 2015
Rural bankers maintained their negative outlook on farmland values, according to the monthly Rural Mainstreet Index conducted by Dr. Ernie Goss, Creighton University. The farmland and ranchland price index for November rose to 34.8 from 31.0 in October. "This is the 24th straight month the index has moved below growth neutral (50). But, as in previous months, there is a great deal of variation across the region in the direction and magnitude of farmland prices with prices growing in some portions of the region," says Goss.
Even with lower farmland prices, more than one-third, or 34.8%, of bankers indicated their banks have sufficient liquidity and continue to lend to farmers as demanded. This proportion differs little from a year ago.
The November farm equipment-sales index advanced to a very weak 14.2 from October's record low 10.8. "The strengthening U.S. dollar and global economic weakness have pushed farm commodity prices down by 14.1% over the past 12 months. These weaker prices have discouraged farmers from buying more agriculture equipment and have negatively affected the agriculture equipment dealers and manufacturers in the region. Bankers remain pessimistic about the short and intermediate prospects for agriculture equipment dealers and producers on Rural Mainstreet," states Goss.
The Rural Mainstreet Index (RMI), which ranges between 0 and 100, sank to 43.7 from October's weak 44.4. "This is the fourth straight month the overall index has declined, reflecting weakness stemming from lower agriculture and energy commodity prices and from downturns in manufacturing," says Goss.
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