Rural Mainstreet Index Falls to Lowest Level Since 2009 Recession10/24/2016
The Creighton University Rural Mainstreet Index sank for October and remained below growth neutral for the 14th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The index, which ranges between 0 and 100 fell to 31.8 from September’s 37.3. This month’s reading is the lowest recorded since April 2009.
“Over the past 12 months, livestock commodity prices have tumbled by 19.7 percent and grain commodity prices have slumped by 18.5 percent. The economic fallout from this price weakness continues to push growth into negative territory for six of ten states in the region,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Jon Schmaderer, president of Tri-County Bank in Stuart, Nebraska said, “The calf market has now officially followed suit with grain and other livestock pricing declines.” Another bank CEO reported calf prices are going to be down 30 to 40 percent, which will have a large downward economic impact.
Bank CEOs project that more than one in five grain farmers, or 21.6 percent, will suffer negative cash flows for 2016. “This is 2.0 percent higher than the July 2016 projection when the same question was asked,” said Goss.
Farming and ranching: The farmland and ranchland-price index for October fell to 25.0 from September’s 40.3. This is the 35th straight month the index has languished below growth neutral 50.0.
The October farm equipment-sales index sank to 13.1 from September’s 14.3. “Weakness in farm income and low agricultural commodity prices continue to restrain the sale of agriculture equipment across the region. This is having a significant and negative impact on both farm equipment dealers and agricultural equipment manufacturers across the region,” said Goss.