It’s not just farmer sentiments reaching record levels. The positive outlook is also pouring into a survey of rural lenders, with the latest Rural Mainstreet Index (RMI) reaching a reading of 78.8. The growth is from April’s reading of 69, a number RMI authors called “very healthy.”
The survey found 60.6% of bank CEOs reported a local economy that expanded from April to May, a statistic driven by the rise in commodity prices. The survey covers a 10-state region, and asks questions of rural lenders from across those areas.
“Strong grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. Even so, current rural economic activity remains below pre-pandemic levels,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at the Creighton University Heider College of Business.
RMI says confidence among rural bankers is also growing, with the RMI confidence index posting a reading of 78.8, which the RMI shows is strong. That’s up from 72.4 in April.
“Federal stimulus checks, strong grain prices, and advancing exports have supported confidence offsetting negatives from pandemic ravaged retail and leisure and hospitality companies in the rural economy,” said Goss.
The sentiments are also rooted from strong farmland prices. RMI says for the first time since 2013, farmland prices expanded for eight straight months, rising above what the survey calls growth-neutral.
It’s not just farmland prices that are on the rise, but also cash rent. The RMI showed bankers reported annual cash rent per acre of $228, which is a 7.3% increase over the past 12 months.
The RMI found the biggest area of concern is coming in the form of labor. Nine out of 10 bank CEOs indicated that hiring at their bank was an issue, even to the point it’s now restraining growth.
