Rural Mainstreet Farmland Prices Show Strongest Growth Since 2013

Posted on 12/17/2020 12:34 PM

For the second time in the past three months, the Creighton University Rural Mainstreet Index (RMI) climbed above growth neutral. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its second highest level in the past 10 months.         

Overall: The overall index for December rose to 51.6 from November’s 46.8, but was down from October’s 53.2. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record low interest rates have underpinned the rural mainstreet economy,” says Dr. Ernie Goss, who conducts the monthly survey.

Farming and ranching: For a third straight month, the farmland price index advanced above growth neutral. The December reading was unchanged from November’s solid 55.0. This is first time since 2013 that the survey has recorded three straight months of rising farmland prices.

The December farm equipment-sales index increased to 50.2, its highest level since June 2013, and up from 42.9 in November. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the month.    

Banking: Bankers once again reported anemic loan volumes. The December loan volume index expanded to 43.7 from November’s record low 25.8. The checking-deposit index dropped to 78.1 from November’s record high 87.1, while the index for certificates of deposit, and other savings instruments fell to 42.2 from 46.8 in November.       

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, soared to 62.9 from November’s 50.0. “Federal farm support payments, improving gain prices, and advancing exports have supported confidence offsetting pessimism from the impact of the pandemic,” said Goss.

Bankers were to indicate their top 10 concerns for 2021 and water availability and was the top concern. Not surprisingly, with strong 2020 farm income and farm commodity prices, farm financial conditions were of least concern for 2021 as judged by bank CEOS.

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.   


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