Ag-related indicators at five-year low in survey

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Posted: Friday, March 21, 2014 12:00 am | Updated: 6:01 pm, Wed Jul 16, 2014.

Farm-related economic indicators hit a five-year low in a survey of rural Midwestern bankers, who expect further declines in coming months.

Parts of the nation dependent on agriculture have had slow or no growth in recent months, Creighton University economist Ernie Goss said Thursday.

His survey of bankers yielded a Rural Mainstreet Index of 50.1 for this month's survey, up slightly from 48.4 in February. An index below 50 means economic decline.

The farm and ranch land price index was 40.9, the lowest since March 2009, and the farm equipment sales index was 29.3, the lowest since May 2009. March was the fourth straight month that the two indexes have indicated decline.

Goss said sales are weak for equipment dealers, but manufacturers are seeing healthy sales in other countries.

He said agriculture needs higher prices for farm commodities to return to the healthy growth trends of 2012 and 2013. Recent increases haven't been enough to improve the rural economy, he said.

The survey had responses from 182 bank executives in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. Their answers yielded a confidence index of 47.3, indicating they expect a declining economy over the coming six months.

The bankers said they expect rent on farmland to increase by less than 1 percent this year, after several years of rapidly rising rents. The change reflects lower demand for farmland by purchasers, who had been paying steadily more for land in recent years.

Goss said he expects rising interest rates to put more downward pressure on farmland prices and rents.

Even so, rural businesses in the states were hiring people, a trend reflected in the survey's hiring index, which rose to 60.0 from 54.3 in February.

Nebraska's overall index was 49.5, up from 48.8 in February but still indicating decline. The state's farmland index was 27.7, down from 42.6 in February. The hiring index was 48.4, down from 52.2 in February.

Iowa's index was 49.8, up from 48.4 in February. The state's farmland index was 37.6, up from 36.3, and its hiring index was 56.3, up from 49.1 in February.

Rural Mainstreet Index

The figures are from a survey of 182 bank executives in rural and non-urban areas of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

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Category February March
Overall 48.4 50.1
Loan volume 50 65.5
Checking deposits 61.7 65.5
CDs 42.5 42.5
Ag land prices 41.7 40.9
Ag equip. sales 30.9 29.3
Home sales 53.4 51.8
Hiring 54.3 60
Retail 40.1 49.2
6-month forecast 47.4 47.3

An index of 50 is neutral. Higher numbers show expansion, lower numbers show decline. The forecast predicts economic activity in six months.

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