“Higher interest rates, weaker agriculture commodity prices and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses and on Rural Mainstreet farmers. Jim Eckert, CEO of Anchor State Bank in Anchor, Ill. indicated that unless crop prices improve, 2024 will not be a good year for area farmers,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University.

Farm equipment sales: The farm equipment-sales index for January sank to 47.9 from December’s weak 49.5. “This is the seventh time in the past eight months that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment,” said Goss.

Farming and ranching land prices: The region’s farmland price index fell to a still strong 64.0 from December’s 67.2. The farmland price index has remained above growth neutral for every month since November 2019. “Creighton’s survey continues to point to solid, but slowing, growth in farmland prices. Approximately, 28.0% of bankers reported that farmland prices expanded from December levels,” said Goss. 

Hiring: The new hiring index for January increased to growth neutral, 50.0, from December’s 49.0. “Almost 100% of bankers reported no change in hiring from December’s hiring activity,” said Goss. 

Retail sales: Retail sales were below growth neutral for the last three months. The retail-sales index for January fell to 46.0 from 46.6 in December. “High consumer debt and elevated interest rates are cutting into retail sales in rural areas of the region,” said Goss.

Confidence: Rural bankers remain very pessimistic about economic growth for their area over the next six months. The January confidence index sank to 38.5 from December’s 43.3. Falling agriculture commodity prices and higher interest rates over the past several months continued to constrain business confidence. 

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After declining below growth neutral in March, the overall Rural Mainstreet Index for July expanded above the threshold for a fourth straight month, according to the July monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading in July slipped to 55.6 from June’s 56.9. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

July 2023 Survey Results at a Glance:

• July’s overall reading, the Rural Mainstreet Index (RMI), rose above growth neutral for a fourth straight month. 
• Farmland prices expanded for the 34th straight month.
• On average, non-farm investors secured approximately 17.1% of farmland sales in the region, up from 9.1% reported by bankers in April 2022.
• More than nine of ten, or 92.5%, indicated that the Fed should cease raising rates.

“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive but slow economic growth for the second quarter and has now started the third quarter on a healthy note,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farm equipment sales: The farm equipment-sales index for July stood at a tepid 50.0, which was up from 48.3 in June. “Higher borrowing costs have begun to negatively impact purchases of farm equipment,” said Goss.

Farming and ranching land prices: The region’s farmland price index rose to 64.6 from 59.3 in June and 56.3 in May. This was the 34th straight month the index has advanced above 50.0. 

Bankers reported, on average, non-farm investors secured approximately 17.1% of farmland sales in their area over the past six months. This is almost double the 9.1% reported by bankers in April 2022 when the same question was asked. 

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