Rural Economy Improving but Ag Bankers Still Gloomy
Jul 16, 2015
Rural Midwestern economy continues to improve, according to the monthly Rural Mainstreet Index survey conducted by Dr. Ernie Goss, Creighton University. The monthly update of bank president and CEO attitudes in ten Midwestern states found the resulting Rural Mainstreet Index rose above growth neutral (50) for July from June's tepid reading. The index climbed to 53.4, up from June's 50.0. This month's reading is the highest since June of last year.
"This is the fourth straight month the index has risen, indicating an upturn in economic conditions for the region. Improving crop prices pushed the overall index and the economic outlook higher for the month," says Goss.
The farmland and ranchland price index for July increased slightly to 31.4 from June's 31.1. "This is the 20th 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," notes Goss.
This month bankers were asked how much farmland prices had changed in their area over the last year. On average, bank CEOs reported prices had fallen by 6.8% over the past 12 months. Seven percent of respondents indicated farmland prices in their area had expanded over the year.
"Approximately 14% registered a decline of 1% to 4%, 34.9% reported a price reduction of 5% to 9% and 27.9% indicated farmland prices had decreased by 10% to 20%. The remaining 16.3% reported no change in farmland prices over the previous 12 months," states Goss.
The July farm equipment-sales index rose to a very weak 17.9 from June's record low 12.5. The index has been below growth neutral for 24 straight months. "With farm income expected to decline for a second straight year, farmers remain very cautious regarding the purchase of agricultural equipment," says Goss.
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