Farmland Cash Rents Fall 16 Percent from Last Year

The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 19th 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 slipped to 45.3 for March from 45.8 in February. The last time the overall index was at or above growth neutral was August 2015.

:Weak farm commodity prices continue to squeeze Rural Mainstreet economies. Over the last 12 months, livestock commodity prices have tumbled by 6.6 percent and grain commodity prices have slumped by 0.9 percent. Thus, year over year price changes remain negative, but are now less negative than several months ago," said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's HeiderCollege of Business.

But there was a great deal of variability across the 10-state region. For example, Scott Tewksbury, president of Heartland State Bank in Edgeley, North Dakota. reported, "Record 2016 crop yields have enabled most crop based farms to have a good economic year in our area, but concerns remain over projected profitability for 2017."

Farming and ranching: The farmland and ranchland-price index for March dipped to a frail 33.0 from Februarys 33.7. This is the 40th straight month the index has languished below growth neutral 50.0.

On average bankers reported an average cash rent for cropland of $212 per acre, which is down by 16.1 percent from last year.

According to Pete Haddeland, CEO First National Bank in Mahnomen, Minnesota, "Land rents in our area are working their way down."

The March farm equipment-sales index increased to a still very weak 22.0 from 20.5 in February. This marks the fifth straight month that the reading has advanced.

Banking: Borrowing by farmers remained above growth neutral for March as the loan-volume index advanced to 58.4 from last months 50.1. The checking-deposit index slumped to a still solid 56.0 from 68.1 in February, while the index for certificates of deposit and other savings instruments increased to 47.6 from 46.8 in February.

Hiring: The job gauge rose to 59.6 from Februarys 54.3. Rural Mainstreet businesses not linked to agriculture increased hiring for the month at a solid pace.

Confidence: The confidence index, which reflects expectations for the economy six months out, rose to 47.5 from 45.7 in February indicating a continued pessimistic outlook among bankers. Until agricultural commodity prices begin to trend higher, I expect bankers economic outlook to remain weak, said Goss.

Home and retail sales: Home sales moved higher for the Rural Mainstreet economy for March with a reading of 56.2, down slightly from Februarys 57.8. The March retail-sales index declined to 41.5 from Februarys 45.8. Much like their urban counterparts, Rural Mainstreet retailers are experiencing pullbacks in sales, reported Goss.

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included. The survey is supported by a grant from Security State Bank in Ansley, Neb.

This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.

Colorado: Colorados Rural Mainstreet Index (RMI) rose to 43.0 from 37.1 in February. The farmland and ranchland-price index sank to 49.4 from Februarys 66.6. Colorados hiring index for March declined to 56.5 from Februarys 68.2.

Illinois: The March RMI for Illinois decreased to 40.3 from 46.4 in February. The farmland-price index declined to 30.5 from Februarys 34.8. The states new-hiring index fell to 51.1 from last months 56.7.

Iowa: The March RMI for Iowa fell to 40.0 from 46.1 in February. Iowas farmland-price index for March sank to 30.4 from 40.1 I February. Iowas new-hiring index for March declined to 50.5 from Februarys 58.6.

Kansas: The Kansas RMI for March increased to 43.4 from Februarys 40.8. The states farmland-price index advanced to 32.0 from 16.8 in February. The new-hiring index for Kansas improved to 57.2 from 48.3 in February.

Minnesota: The March RMI for Minnesota dipped to 46.1 from Februarys 47.5. Minnesotas farmland-price index slumped to 33.4 from 38.1 in February. The new-hiring index for the state jumped to 62.7 from last months 57.9.

Missouri: The March RMI for Missouri advanced to 56.7 from 55.9 in February. The farmland-price index sank to 42.3 from Februarys 56.2. Missouris new-hiring index slipped to 61.2 from 64.4 in February.

Nebraska: The Nebraska RMI for March declined to 43.3 from 47.1 in February. The states farmland-price index fell to 32.0 from Februarys 39.3. Nebraskas new-hiring index declined to 57.1 from 58.3 in February.

North Dakota: The North Dakota RMI for March slumped to 25.4 from Februarys 38.0. The farmland-price index increased to 23.1 from Februarys 19.9. North Dakotas new-hiring index plummeted to 21.3 from 38.1 in February.

South Dakota: The March RMI for South Dakota fell to 51.3 from Februarys 55.9 . The farmland-price index slumped to 36.0 from Februarys 59.2. South Dakota's new-hiring index advanced to 73.0 from Februarys 65.5.

Wyoming: The March RMI for Wyoming sank to 36.5 from 42.3 in February. The March farmland and ranchland-price index climbed to 28.6 from Februarys 22.3. Wyomings new-hiring index fell to 43.5 from Februarys 46.1.


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