Small Drop for Farmland Values Predicted by Rural Bankers

August 17, 2017 12:41 PM
Small Drop for Farmland Values Predicted by Rural Bankers

The sentiment around farmland values seems to be slowly turning, according to Creighton University’s Rural Mainstreet Index (RMI) for August 2017. The monthly survey of bank CEOs in a 10-state Midwest region showed the highest farmland and ranchland-price index since July 2014.

For August, the farmland index rose to 43, which is up from last month’s 36.6, but still marks the 45th straight month the index has fallen below growth-neutral 50.

On average bankers expect farmland prices to decline by another 3.5% over the next year. This is an improvement from this time last year when bank CEOs, on average, projected a nearly 7% decline.

For cropland cash rents, bankers reported a yearly rent of $241 per acre, which is down from 12 months earlier when bankers reported $252 per acre. That’s a 4.3% decline over the past year.

The Rural Mainstreet Index, which ranges between 0 and 100, increased to 42.2 but is still below the neutral growth mark of 50. This month’s index is up from July’s 40.7, which was the lowest level since November of last year.

“We continue to record economic weakness stemming from low agriculture commodity prices and fallout from the drought in parts of the region. Approximately 57.6% of bankers reported drought conditions were having a negative impact on agriculture production in their area,” says Ernie Goss, who chairs Creighton’s Heider College of Business.

Looking ahead at the next six months, bankers continue to be pessimistic. The confidence index slumped to 35.6 from 38.4 in July.

“Concerns about trade combined with drought conditions in portions of the region sank bankers’ economic outlook,” said Goss.


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