A Creighton University survey of rural bankers reflects a bleak picture for U.S. farmers.
For a 13th straight month, the overall Rural Mainstreet Index from Creighton University sank below growth neutral, according to the September survey of bank CEOs in rural areas of a 10-state region dependent on agriculture or energy.
The region’s overall reading of 37.5 for September was the lowest since the beginning of the pandemic in spring 2020, according to a news release. The index ranges between 0 and 100, with a reading of 50 that represents growth neutral.
“Weak agriculture commodity prices, sinking agriculture equipment sales and elevated input costs pushed the overall reading below growth neutral for the 13th straight month,” Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton University’s Heider College of Business, said in the release.
For the fourth time in the past five months, farmland prices sank, according to the survey. The region’s farmland index fell to 43.8 from 45.5 in August.
“Only 4.2% of bank CEOs reported that farmland prices expanded from August levels,” Goss said.
On average, bank CEOs expect farmland prices to decline by 5.3% in the next 12 months.
“Of greater concern, approximately one-fourth of bankers anticipate a 10% to 20% downturn in farmland prices over the next year,” Goss said.
The farm equipment sales index for September increased to 19 from 16.7, though September represents the 14th straight month that the index has fallen below growth neutral.
“Higher borrowing costs, tighter credit conditions and negative farm income are having a negative impact on the purchases of farm equipment,” Goss said.
Across the region, bankers expect approximately 39.1% of farmers to experience negative 2024 farm income.
Rural bankers remain very pessimistic about economic growth for their area over the next six months, the release said. The September confidence index slumped to 22.9 — its lowest level since November of last year — down from 27.3 in August.
“Weak agriculture commodity prices, negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to constrain banker confidence,” Goss said.
