The Midwest economy is expected to continue to grow slowly this year, with the Rural Mainstreet Index climbing for the fifth time in the past six months, Creighton University economist Ernie Goss said Thursday.
The index grew to 58.2 from 55.6 in January. The index, which is based on a survey of rural bankers in 10 states, ranges between 0 and 100, with 50 representing growth neutral.
February's index was down slightly from this time last year, said Goss, who created the survey with Bill McQuillan, president of CNB Community Bank of Greeley, Neb., but he expects that economic growth for the region to continue on a slow but positive pace.
“Based on our surveys over the past several months,” Goss said, “2013 is stacking up to be a good year for farm income, according to bankers. This is showing up in healthy growth in farmland prices and the sales of farm equipment.”
The farm equipment sales index grew to 65.8 from 63.8, while the farmland price index declined for the third straight month while remaining above growth neutral for the 37th consecutive month at a still-strong 67. It was 71.5 in January.
The confidence index, which reflects a six-month forecast, dipped to 51.7 from 55.5. Goss said the failure to pass a new farm bill and the impending spending sequestration combined to lower confidence in future Rural Mainstreet economic growth.
Bankers surveyed cautioned that low corn prices could threaten farmers' ability to repay loans. On average, they reported that corn prices below $3.86 would threaten loan repayments and a break even corn price for farmers that rent their land would be $4.84 per bushel.
“Farmers should be very cautious in 2013 and 2014 and be conservative from an economic standpoint,” said Dale Bradley, CEO of The Citizens State Bank, in Miltonvale Kan.
Nebraska's index grew to 52.7, up from 48.8. The state's farmland price index decreased to 60.7 from 66.2 in January, while its new hiring index increased to 48.3 from 47.1.
Iowa's index increased slightly to 59.8 from 59. Its farmland price index dropped to 70.4 from 75.4 and its new hiring index for February bumped up to 54.7 from 53.2.
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