Rural Mainstreet Index Rose in February, Still Very Weak02/22/2016
While the Creighton University Rural Mainstreet Index rose for February, 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 37.0 from January’s 34.8.
“This is the sixth 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 8 percent, and fuels by roughly 22 percent,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Only 8.7 percent of bank CEOs reported their local economy was expanding while approximately 36.9 percent indicated their local economy was in a recession.
Farming and ranching: The farmland and ranchland price index for February climbed to 29.8 from January’s 23.9. This is the 27th 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. For example, Cameron Mathis with Tilden Bank in Creighton, Nebraska, reported, “I recently had two irrigated quarters of farm ground sell for $8,650 at auction.”
Bank CEOs reported an average annual cash rent for farmland, excluding pastureland, of $221. This is down by approximately 15 percent from July 2015.
On the other hand, Jim Stanosheck, CEO of State Bank of Odell in Odell, Nebraska, indicated, “Irrigated cash rents moved higher.”
The February farm equipment-sales index climbed to 11.3 from January’s record low 7.0. “The strong U.S. dollar and global economic weakness have pushed grain prices down by 11 percent and slaughter cattle prices are 22 percent lower over the past 12 months. These weaker prices have discouraged farmers from buying additional agriculture equipment and have negatively affected the agriculture equipment dealers and manufacturers in the region,” said Goss.
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Source: Agri Marketing