Rural Bankers Turn Even More Negative on Farmland Values
Dec 17, 2015
Rural bankers have turned even more negative on farmland prices, according to this month's Rural Mainstreet Index, conducted by Creighton University's Dr. Ernie Goss. The survey, which measure rural bank CEO attitudes across ten Midwestern states, found the farmland and ranchland price index for December sank to 28.8 from November's weak 34.8. The index considers a rating of 50 to be growth neutral.
"This is the 25th straight month the index has moved below growth neutral. 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.
This month bankers were asked to predict the change in farmland prices in their area over the next year. On average bank CEOs expect farmland prices to drop by another 5.9% over the next year. As farm income has declined so has the share of farmland cash sales. Over the past year, the percentage of cash sales of farmland has declined by 3%. "I expect the percent of cash sales of farmland to decline even more in the months ahead," states Goss.
The December farm equipment-sales index plummeted to a record low 8.8 from 14.2 from November. "The strengthening U.S. dollar and global economic weakness have pushed farm commodity prices down by 8% over the past 12 months. These weaker prices have discouraged farmers from buying additional agriculture equipment and have negatively affected the agriculture equipment dealers and manufacturers in the region," observes Goss.
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