For 16 straight months, the rural economy has posted healthy and consistent growth. That’s according to the March Rural Mainstreet Index (RMI) from Creighton University.
For March 2021, the RMI sits at 65.4. That is up from February’s 61.5. The index ranges between 0 and 100 with a reading of 50 representing growth neutral and is generated by a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
“A 25% gain in farm commodity prices over the past 12 months, near-record-low short-term interest rates and growing agricultural exports have underpinned the Rural Mainstreet Economy,” says Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI.
Compared to 2021 net farm income:
- 42% of bank CEOs expect higher 2022 net farm income
- 46% expect no change
- 12% expect a fall in 2022 net farm income
“The bankers are very positive on commodity prices — grain and livestock,” Goss says. “They’re not quite as positive on costs, as they expect costs to rise dramatically. But they expect revenues to rise even more dramatically.”
While loan activity has increased, farmers seem to be in good cash positions, Goss adds.
Despite surging farm input costs and global tensions, over 96% of bankers indicated they had not tightened credit standards for farmers.
Listen to Goss discuss the latest RMI with AgriTalk’s Chip Flory:
Farmland Index Posts 18th Straight Month of Growth
The region’s farmland price index decreased to a still strong 78 from February’s 78.8. March’s reading represented the 18th straight month that the index has moved above growth neutral.
The March farm equipment-sales index increased slightly to 72.2 from 72.0 in February. This was the 16th straight month that the index has advanced above growth neutral. Readings over the past several months are the strongest string of monthly readings recorded since Spring 2011.
Around 28% of bankers expect Russia’s invasion of Ukraine to have negative impacts on net farm income. Of bankers projecting negative impacts, damages are expected to be higher for livestock producers than for grain producers.
While inflation, global unrest and high fuel prices are headwinds to the ag economy, Goss says there are still more positives than negatives.
Looking forward, bankers’ business confidence, which reflects bank CEO expectations for the economy six months out, advanced to a solid 54 for March, up from 51.9 in February.
The RMI, which started in 2005, represents an early snapshot of the economy of rural agricultural and energy-dependent portions of the nation. It focuses on 200 rural communities with an average population of 1,300.
