The Creighton University Rural Mainstreet Index declined slightly in January from December's weak reading, remaining below growth neutral, according to the latest monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
The index, like all indices in the survey, ranges between 0 and 100 with 50.0 representing growth neutral, fell to 46.8 from 47.8 in December. Though the overall index remained below growth neutral, it is significantly higher than the reading for January 2017.
"While the overall Rural Mainstreet Index (RMI) for January declined and remained below growth neutral, year-over-year indices are trending higher. Clearly, based on our recent surveys, the negatives are getting less negative," says Dr. Ernie Goss, who conducts the monthly survey.
When asked to name the greatest 2018 economic challenge for their banks, 4 in 10 bankers reported that loan defaults represented the biggest challenges for the year ahead. This is well ahead of the second ranked challenge of competition from Farm Credit coming in at 15.6%.
The farmland and ranchland-price index for January rose to 42.2 from 39.8 in December. This is the 50th straight month the index has fallen below growth neutral 50.0.
However, there was a great variability among bankers regarding farmland prices. For example, Pete Haddeland, CEO of the First National Bank in Mahnomen, Minnesota, says, "Farmland values are holding in our area."
Regarding farmers that are cash renting farmland Brian Schroeder, president and CEO, Minier, Illinois, reported, "Land owners have conceded very little to this point." However, Schroeder does expect that to change as cash rents move lower.