Rural Mainstreet Index Rises03/21/2016
While the Creighton University Rural Mainstreet Index rose for March, it remains weak, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100, increased to 40.2 from February’s 37.0 and January’s 34.8.
“This is the seventh straight month the overall index has moved below growth neutral. Recent declines are the result of lower agriculture and energy commodity prices and downturns in manufacturing. Since June of last year, prices for farm products have fallen by approximately 11 percent, and fuel by roughly 25 percent,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Farming and ranching: The farmland and ranchland price index for March tumbled to 20.2 from February’s 29.8. This is the 28th straight month the index has moved below growth neutral.
As in previous months, there is a great deal of variation across the region in the direction and magnitude of farmland prices, with prices growing in some portions of the region. On average, bankers reported an average decline of 6.7 percent over the past year. Only 4.4 percent of bankers reported an increase in farmland prices over the past 12 months, and approximately 4.6 percent detailed farmland price declines of more than 20 percent over the same period of time.
Jeffrey Bonnett president of the Havana National Bank in Havana, Illinois, reported sales of 775 acres of tillable land for $13,000 per acre. According to Bonnett, “This is above average ground in the area we serve, but with the low interest rate environment, land values seem to be holding steady.”
The March farm equipment-sales index sank to a record low of 6.7 from February’s 11.3. “Weakness in farm income continues to constraint the sale of agriculture equipment across the region. Reductions in farm prices have negatively affected the agriculture equipment dealers and manufacturers in the region,” said Goss.
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Source: Agri Marketing