Rural Mainstreet Economy Fell to Early Pandemic Low

September 2024 Survey Results at a Glance:
-The Rural Mainstreet Index plummeted to its lowest level since the beginning of the pandemic and fell below growth neutral for the 13th straight month.
-For the fourth time in the past five months, farmland prices sank. 
-On average, bank CEOs expect farmland prices to fall by 5.2% in the next year with almost one fourth anticipating price declines between 10% and 20%.
-Farm equipment sales sank for the 14th straight month.
-On average, bankers expect almost 40% of farmers in the region to experience negative 2024 farm income.
-According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024 year-to-date were up by $57.0 million (0.8%) from the same period in 2023.
 
OMAHA, Nebraska (Sept. 19, 2024) — For a 13th straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the September survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for September sank to 37.5 from 40.9 in August. It was the lowest reading since the beginning of the pandemic in spring 2020. The index ranges between 0 and 100, with a reading of 50.0 that represents growth neutral.

“Weak agriculture commodity prices, sinking agriculture equipment sales and elevated input costs pushed the overall reading below growth neutral for the 13th straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois, said, “Harvest has not really started in our area, but a couple of farmers (who always have to be first) have combined some early corn varieties, and the results suggest that the crop will be good but down from 2022 and 2023.”

Other comments from bankers for September:

-Terry Engelken, Vice President of Washington State Bank in Washington, Iowa, reported that “Early yields for both corn and soybeans are very good.”
-Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, said, “The question regarding what percent of our area farmers will have a net loss for 2024 is interesting. Based upon current corn and soybean prices of about $1.50 to $2.00 below break even, I believe this will be a high percentage.”

Farming and ranching land prices: For the fourth time in the past five months, farmland prices sank. The region’s farmland index fell to 43.8 from August’s 45.5. “Only 4.2% of bank CEOs reported that farmland prices expanded from August levels,” said Goss.

On average, bank CEOs expect farmland prices to decline by 5.3% in the next 12 months. “Of greater concern, approximately one-fourth of bankers anticipate a 10% to 20% downturn in farmland prices over the next year,” said Goss.

According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024 year-to-date were up by $57.0 million (0.8%) from the same period in 2023.

Farm equipment sales: The farm equipment sales index for September increased to 19.0 from 16.7. “This is the 14th straight month that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and negative farm income are having a negative impact on the purchases of farm equipment,” said Goss.

Across the region, bankers expect approximately 39.1% of farmers to experience negative 2024 farm income. 

Banking: The September loan volume index slipped to a still strong 68.8 from 75.0. The checking deposit index climbed to a weak 41.3 from 34.1 in August. The index for certificates of deposits and other savings instruments climbed to 56.5 from 52.3 in August. The Federal Reserve’s higher interest rate policies have boosted CD purchases above growth neutral for 22 straight months.

Hiring: The new hiring index for September dropped to 43.5 from 45.5 in August.

Confidence: Rural bankers remain very pessimistic about economic growth for their area over the next six months. The September confidence index slumped to 22.9, its lowest level since November of last year, and down from 27.3 in August. “Weak agriculture commodity prices, negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to constrain banker confidence,” said Goss.

Home and retail sales: After August’s growth neutral reading for home sales, the home sales index fell to 43.8. Likewise, retail sales in the region, much like that for the nation, were very weak with a September index of 30.4, the lowest since June 2020, and down from 38.6 in August.

“High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales for the Rural Mainstreet Economy,” said Goss.

The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index that covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides 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 and launched it in January 2006.

Below are the state reports:

Colorado: The state’s Rural Mainstreet Index (RMI) for September increased to 61.6 from August’s 51.1. The farmland and ranchland price index for September rose to 60.0 from 51.2 in August. The state’s new hiring index climbed to 63.3 from 50.2 in August. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were up by $152.7 million or 206.5% from the same period in 2023.

Illinois: The state’s September RMI sank to 43.9 from August’s 44.5. The farmland price index dropped to 45.7 from 45.9 in August. The state’s new hiring index fell to 45.2 from 45.9 in August. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were down by $139.0 million or 5.1% from the same period in 2023.

According to Jeff Bonnett, CEO of Havana National Bank in Havana, “Thankfully on the east side of the Illinois River (irrigated ground), our farm producers can raise seed corn, popcorn, green beans, potatoes, pumpkins and other contracted vegetables to manage their profitability. Going into harvest, this is a reality, and utilizing options was not as advantageous this year either.”

Iowa: September’s RMI for the state decreased slightly to 44.0 from 44.2 in August. Iowa’s farmland price index for September sank to 45.7 from 53.4 in August. Iowa’s new hiring index for September rose to 52.4 from August’s 51.6. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were down by $8.1 million or 0.8% from the same period in 2023. 

Kansas: The Kansas RMI for September dipped to 34.1 from 34.2 in August. The state’s farmland price index fell to 42.3 from 43.0 in August. The new hiring index for Kansas sank to 39.6 from 42.3 in August. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were up by $49.0 million or 6.7% from the same period in 2023.

Minnesota: The September RMI for Minnesota dipped to 48.1 from August’s 49.3. Minnesota’s farmland price index dropped to 42.2 from 47.3 last month. The new hiring index for September decreased to 43.2 from 47.6 in August. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were down by $30.8 million or 4.5% from the same period in 2023.

Missouri: The state’s September RMI sank to 53.5 from August’s 55.6. The farmland price index for September rose to 63.8 from 53.9 last month. The state’s new hiring gauge for September expanded to 63.8 from August’s 55.9. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were down by $164.6 million or 23.3% from the same period in 2023.

Nebraska: The Nebraska RMI for September slumped to 35.1 from 36.5 in August. The state’s farmland price index for September dropped to 42.7 from 43.6 in August. Nebraska’s September new-hiring index sank to 42.7 from 43.1 last month. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were up by $140.1 million or 37.8% from the same period in 2023.

North Dakota: North Dakota’s RMI for September increased to 41.3 from 40.3 in August. The state’s farmland price index climbed to 45.0 from 44.7 in August. The state’s new hiring index declined to 41.4 from 44.7 in August. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were up by $56.1 million or 10.4% from the same period in 2023.

South Dakota: The September RMI for South Dakota increased to 46.0 from 44.6 in August. The state’s farmland price index rose to 46.3 from 46.0 in August. South Dakota’s September new hiring index climbed to 46.5 from 42.4. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were up by $3.3 million or 4.2% from the same period in 2023.

Wyoming: The September RMI for Wyoming sank 34.8 from 35.3 in August. The September farmland and ranchland price index dropped to 41.6 from August’s 43.3. Wyoming’s new hiring index fell to 40.6 from 42.7 in August. According to trade data from the International Trade Association, exports of agriculture goods and livestock for 2024 year-to-date were down by $1.7 million or 46.7% from the same period in 2023.