The Creighton University Rural Mainstreet Index (RMI) for April stood at growth neutral for the month. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the RMI has now remained at, or above, growth neutral 50.0 for five straight months.
Overall: The overall index slipped to 50.0 from 52.9 in March. Since falling below growth neutral in November of last year, the overall RMI has risen above the growth neutral value. The index ranges between 0 and 100 with 50.0 representing growth neutral.
"Our surveys over the last several months indicate the Rural Mainstreet economy is expanding outside of agriculture. However, this month, 43.8% of bank CEOs indicated that the recent floods were having a negative impact on their local economy," saysDr. Ernie Goss, who conducts the survey.
As detailed by Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, "The recent flood event has been devastating to southwest Iowa and eastern Nebraska. It has been a very frustrating process for homeowners, farmers and other businesses who have been unable to get into their homes or businesses because safety issues continue to be a concern."
Farming and ranching: The farmland and ranchland-price index for April rose to 45.2, its highest level since February of last year, and up from March's 36.4. This is the 65th straight month the index has remained below growth neutral 50.0.
The April farm equipment-sales index sank to 27.4 from March's 32.8. This marks the 68th straight month that the reading has fallen below growth neutral 50.0.
Bankers were asked which farmers sustained the greatest economic damages from the floods in their area. Of bankers reporting farm flood damage, approximately one-half indicated grain farmers incurred the greatest economic damage, while 40% indicated the greatest flood damage was sustained by livestock operators. The remaining 10% indicated the greatest flood damage was sustained by farm residences.
According to bank CEO Winum, "Short term it is important that Congress get past all the politics and pass a comprehensive disaster relief bill that allows people to make decisions. For the long-term viability of impacted homeowners, farmers and businesses, the commitment to rebuild our levees and re-evaluate flood control priorities going forward will ultimately determine whether communities and businesses can be confident that this event will never happen again."
Banking: Borrowing by farmers for April surged as the borrowing index climbed to 81.3, a record high, from March's high 76.7. The checking-deposit index increased to 50.0 from March's 42.4, while the index for certificates of deposit and other savings instruments rose to 50.1 from 47.1 in March.
In terms of financial stress for farmers, more than one-fifth, or 21.9, expect recent floods to increase farm loan defaults. On the other hand, 78.1% expect floods to have little or no impact on farm loan defaults.