December RMI continues its recovery

For the second time in three months, the Rural Mainstreet Index sat above growth neutral, with equipment sales and land prices also hitting positive notes. The overall index for December rose to 51.6 from 46.8 in November, but was down from October’s 53.2 reading.

Farm equipment sales climbed above growth neutral for the first time since June 2013, jumping to 50.2 from November’s 42.9. Farmland prices saw three straight months above growth neutral for the first time since 2013 as well, sitting flat from November’s 55.0.

Ernie Goss

“Recent improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, Omaha, Neb.

In less positive news, ag lenders continue to report slow loan growth. December loan volume expanded to 43.7 from November’s record low 25.8. The checking-deposit index dropped to 78.1 from November’s record high 87.1, while the index for certificates of deposit and other savings instruments fell to 42.2 from 46.8 in November.

Banker respondents indicated that water availability and farm labor topped their concerns for next year (see table below) while farm financial conditions, bolstered by strong 2020 farm income and commodity prices, sat near the bottom. COVID-19 and its economic impact ranked near the middle, at 6 out of 10.

The new-hiring index slipped to 50.0 from November’s 53.2. Data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment levels for the Rural Mainstreet economy are down by 95,000 (non-seasonally adjusted), or 2.2 percent, compared to pre-COVID-19 levels, and by 216,000, or 4.8 percent, from 12 months earlier.  

“It will take many months of above growth neutral readings to get back to pre-COVID-19 employment levels for the region,” Goss said.

The RMI surveys community bank presidents and CEOs each month in nonurban agriculturally and energy-dependent areas regarding current and projected economic conditions in their communities. Bankers come from about 200 small towns with an average population of 1,300 in 10 states: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.

Top 2021 Concerns for Farming Economy
Issue Average Score
(on a 1-10 scale)
1. Water availability 7.4
2. Farm labor (cost and availability) 7.0
3. Third party financing 6.7
4. Land rents and land values 5.7
5. Uncertainty around tariffs and trade 5.3
6. Covid-19 and its economic impacts 4.9
7. Total leverage 4.5
8. Federal government financial support 4.4
9. Farm income levels 4.3
10. Farmer liquidity (working capital) 3.8

Source: Creighton University’s December 2020 Rural Mainstreet Survey