Fewer than half of bankers expect farm income to increase this year, according to Creighton University’s monthly Rural Mainstreet Index.
Approximately 42 percent of bank CEOs expect higher net farm income, with 46 percent projecting no change. Less than 12 percent anticipate a decrease in net income, according to the survey of small-town bank CEOs in a 10-state Midwest region dependent on energy and agriculture.
Those expectations align with a February U.S. Department of Agriculture report projecting that net farm income would decrease 4.5 percent or $5.4 billion this year after spiking 25 percent in 2021. Even with that drop, the projected $113.7 billion in 2022 U.S. farm income would still be 15 percent higher on an inflation-adjusted basis than the average of nearly $99 billion from 2001 to 2020.
The index jumped four points in March to 65, and has indicated strong growth for nearly 18 months. Indexes for regional farmland prices and equipment sales remain high. The loan volume index spiked more than 20 points in March to nearly 62.
Approximately 60 percent of bankers expect Russia’s invasion of Ukraine to have a negative fallout for farmers. Despite the invasion and subsequent sanctions and worldwide trade concerns, six-month confidence expectations increased two points to 54. Ernie Goss, Jack A. MacAllister chair in regional economics at Creighton University, said a 25 percent spike in farm commodity prices, near-record-low short-term interest rates and a jump in ag exports have formed the basis for the strong economy.
The Rural Mainstreet Index operates on a 100-point scale. Any reading above 50 is considered indicative of strong economic expectations.