The overall Rural Mainstreet Index (RMI) climbed to a 17-month high according to Creighton University’s November survey of bank CEOs in an 11-state region. The RMI rose to 40.9, which is the highest since July 2008, but still considerably below growth neutral 50.0. The farm equipment index, loan volume index, and confidence index all increased, while the hiring and farmland price indexes decreased after November highs.
The farmland price index decreased to 44.9 from a 12-month high of 45.6 in November. This marks the 14th straight month that the index has been below 50.0, although some areas with quality land have seen better prices. "Several land auctions in our area this past month have shown steady to slightly stronger prices," said Dan Coup, CEO of First National Bank in Hope, Kansas.
The hiring index slipped to 33.6 from an already weak 36.3. The hiring index has not been above 40.0 for over 16 months and only 6% of surveyed bankers reported an upturn in hiring.
Farm equipment sales increased during December. The index increased to 40.4, which is the first time it has been above 40.0 since November 2008. Loan volumes also increased. The loan volume index came in at 45.7, rebounding from November’s record low 38.3. The index is the highest since June of this year.
The confidence index, which indicates banker’s outlook on the rural mainstreet economy six months out, increased to 53.7. This marks the third consecutive month that the index remained above growth neutral.
Many farmers have not had a chance to even think about buying more land to expand operations this year because of such a late harvest. Land has been selling, but we expect an increase sales and prices in January when farmers will finally have an opportunity to purchase new ground.
Credit has been becoming tight across rural mainstreet for a few months now. It was good to see the loan volume bounce back from its low 38.3 last month. The survey revealed that over half of the bankers reported that weak credit conditions were due to bank regulators. "The federal government tells banks to lend to small business, but the regulators don't have the same message," said Pete Haddeland, president of the First National Bank in Mahnomen, Minnesota.
Finally, it is promising to see that the confidence index remained above 50.0 in December, pushing the overall RMI to 40.9, marking four months of consistent growth.
Read more about agriculture and farmland at farmlandforecast.colvin-co.com.