The Creighton University Rural Mainstreet Index continued to improve in July, climbing to 44.1 The index is still well below growth neutral, but up from June’s 37.9 and April’s record low 12.1.
Farmland prices continue to slide, with a July reading of 45.6, down from June’s 46.8. Falling agriculture commodity prices and farm income have failed to diminish annual farm rents per acre. Bank CEOs reported average per acre farmland rents of $220 which is almost unchanged from that detailed earlier this year, and four years ago.
“Farm commodity prices are down by 12.5 percent over the last 12 months. As a result, and despite the initiation of $16 billion in USDA farm support payments, only 6 percent of bankers reported their area economy had improved compared to June while 17.6 percent said economic conditions had worsened,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, Omaha.
The July farm equipment-sales index increased to a weak 34.4 from 32.8 in June. This marks the 82nd straight month the reading has remained below growth neutral 50.0.
Borrowing by farmers expanded for July, but at a slower rate than in June. The borrowing index fell to 57.4 from June’s 63.6. This month, bankers estimated that farm loan defaults would rise by 5 percent over the next 12- month period. This is up slightly from 4.8 percent registered one year ago.
Hiring was flat, but “even so, data from the U.S. Bureau of Labor Statistics indicate that employment levels for the Rural Mainstreet economy are down by 372,000, or 8.5 percent compared to pre-COVID-19 levels,” 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.