Rural Mainstreet healthy; Farmland price index lowest in 4 years

2013. 12. 27

 

17 hours, 46 min ago From illinoisagconnection.com

 

From From illinoisagconnection.com:

Growth for the Rural Mainstreet economy climbed, according to the December survey of bank CEOs in a 10-state area.

 

Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100, with 50.0 representing growth neutral, rose to 56.1 from November's moderate 54.3.

 

"The overall index for the Rural Mainstreet Economy continues to indicate that the areas of the nation highly dependent on agriculture and energy continue to expand at a healthy pace. This month we asked bankers to name the biggest threat to the rural economy for 2014. Approximately 80.6 percent named lower agriculture prices to be the greatest economic threat in the next year while 10.6 percent said the Affordable Care Act was the biggest economic challenge for 2014," said Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University.

 

Farming: The farmland-price index plunged to 47.0, its lowest level since December 2009, and was down from November's 54.3. "This is the first time in four years that the farmland-price index has moved below growth neutral. As agriculture commodity prices have moved lower, so have farmland prices," said Goss.

 

According to David Callies, CEO of Miner County Bank in Howard, S.D., "Continued increases in ag real estate prices and cash rents, along with lower crop prices, are a major concern for community banks.

 

Farm equipment sales remained below growth neutral for the sixth straight month. The December index sank to a weak 44.3, the lowest reading since August 2012 and down from 47.3 in November. "Over the past year, grain prices have declined by roughly 35 percent. This has significantly reduced farmers' willingness to purchase agriculture equipment," said Goss.

 

Bankers expect 2014 cash rents for non-irrigated cropland to average approximately $252 per acre. "However, 3.2 percent of bankers forecast 2014 cash rents above $500 per acre. Additional declines in agriculture commodity prices will present a real challenge for a significant share of farmers that are cash renting," said Goss.

 

Jeff Bonnett, president of Havana National Bank in Havana, Ill., reported, "2014 will be interesting, as input costs have not come down in relation to commodity prices. Fasten your chin straps firmly and hold on, it may be an interesting ride."

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