By Larry Dreiling
The Rural Mainstreet Index moved to its lowest level in almost two years, according to the August survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
The index has been trending lower since June 2013 when the reading stood at 60.5.
Overall, the Rural Mainstreet Index (RMI), which ranges between 0 and 100, with 50.0 representing growth neutral, fell to 48.3 from July’s 51.8.
“Agriculture commodity prices have plummeted for crop farmers in our region and are expected to move even lower in the months ahead,” said Ernie Goss, Ph.D., the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, in Omaha, Nebraska.
“This decline has spilled over into the broader rural economy according to our survey. With record crop supplies anticipated by analysts, I expect readings to move even lower in the months ahead.”
Farming and ranching: The farmland and ranchland price index for August slumped to 41.4, from July’s 48.3.
“Much weaker crop prices are taking the air out of agriculture land prices. This is the ninth straight month that the index has moved below growth neutral,” Goss said.
This month, bankers were asked to project farmland prices for the next 12 months. On average, bank CEOs expect farmland prices to fall by 4.8 percent. Just six months ago, bankers expected a decline of 3.2 percent over the next 12 months.
“Clearly, bankers are becoming more pessimistic regarding the trend in farmland prices,” Goss said. [Read More]