Farmland cash rents fall 16 percent from last year
OMAHA, Neb. -- The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 19th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agricultur...
OMAHA, Neb. - The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 19th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
The index, which ranges between 0 and 100, slipped to 45.3 for March from 45.8 in February. The last time the overall index was at or above growth neutral was August 2015.
During the past 12 months, livestock commodity prices have tumbled by 6.6 percent and grain commodity prices have slumped by 0.9 percent. Year over year price changes remain negative, but are now less negative than several months ago, says Ernie Goss, Jack A.MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
But there was a great deal of variability across the 10-state region. For example, Scott Tewksbury, president of Heartland State Bank in Edgeley, N.D., reported, "Record 2016 crop yields have enabled most crop based farms to have a good economic year in our area, but concerns remain over projected profitability for 2017.
Farming and ranching: The farmland and ranchland-price index for March dipped to a frail 33 from February's 33.7. This is the 40th straight month the index has languished below growth neutral 50. On average, bankers reported an average cash rent for cropland of $212 per acre, which is down by 16.1 percent from last year.
According to Pete Haddeland, CEO First National Bank in Mahnomen, Minn., "Land rents in our area are working their way down."
The March farm equipment-sales index increased to a still very weak 22 from 20.5 in February. This marks the fifth straight month that the reading has advanced.
Banking: Borrowing by farmers remained above growth neutral for March as the loan-volume index advanced to 58.4 from last month's 50.1. The checking-deposit index slumped to a still solid 56 from 68.1 in February, while the index for certificates of deposit and other savings instruments increased to 47.6 from 46.8 in February.
Hiring: The job gauge rose to 59.6 from February's 54.3. Rural Mainstreet businesses not linked to agriculture increased hiring for the month at a solid pace.
Confidence: The confidence index, which reflects expectations for the economy six months out, rose to 47.5 from 45.7 in February indicating a continued pessimistic outlook among bankers.
Home and retail sales: Home sales moved higher for the Rural Mainstreet economy for March with a reading of 56.2, down slightly from February's 57.8. The March retail-sales index declined to 41.5 from February's 45.8.
Each month, community bank presidents and CEOs in rural agriculturally and energy-dependent portions of a 10-state area are surveyed regarding economic conditions in their communities and their projected economic outlooks six months down the road. This survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation.
Minnesota: The March Rural Mainstreet Index for Minnesota dipped to 46.1 from February's 47.5. Minnesota's farmland-price index slumped to 33.4 from 38.1 in February. The new-hiring index for the state jumped to 62.7 from last month's 57.9.
North Dakota: The North Dakota index for March slumped to 25.4 from February's 38. The farmland-price index increased to 23.1 from February's 19.9. North Dakota's new-hiring index plummeted to 21.3 from 38.1 in February.
South Dakota: The March index for South Dakota fell to 51.3 from February's 55.9 . The farmland-price index slumped to 36 from February's 59.2. South Dakota's new-hiring index advanced to 73 from February's 65.5.