Overall: The region鈥檚 overall reading for August rose to 50.3 from 42.1 in July.

Approximately, 47.5% of bankers expect farm income to decline in the next 12 months. Roughly 36.8% anticipate little or no change in farm income, while the remaining 15.7% expect a slight increase in farm income over the 12-month period.

Farm equipment sales: The August farm equipment sales index sank to a very weak 22.2 from July鈥檚 27.8. This is the 36th straight month that the index has fallen below growth neutral.

鈥淭ariffs on imported steel/aluminum and the conflict in Iran continue to create volatility in the agricultural sector. Producers are not as willing to purchase new farm equipment due to volatility, along with low and negative cash flows,鈥� said Goss.

As a result of weak farm equipment sales, bankers reported that borrowing to support farm equipment purchases accounted for only 5.3% of agriculture lending, while real estate loans represented 52.6% of ag lending. Operating loans accounted for 31.4%, livestock loans represented 5.6% and 5.1% accounted for other remaining loans as reported by bank CEOs in August.

Farming and ranchland prices: For the first time since April of this year, the farm and ranchland price index fell below growth neutral. The farm and ranchland index dropped to 47.2 from 52.8 in July.

Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The August economic confidence index slumped to 31.6 from July鈥檚 34.2.

鈥淲eak grain prices, higher input costs and volatility stemming from the Iran war and tariff uncertainty continue to weigh on banker confidence,鈥� said Goss.

The table below summarizes the survey’s findings.

Source: my

鈥淗igher interest rates, weaker agriculture commodity prices and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses and on Rural Mainstreet farmers. Jim Eckert, CEO of Anchor State Bank in Anchor, Ill. indicated that unless crop prices improve, 2024 will not be a good year for area farmers,鈥� said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University.

Farm equipment sales: The farm equipment-sales index for January sank to 47.9 from December鈥檚 weak 49.5. 鈥淭his is the seventh time in the past eight months that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment,鈥� said Goss.

Farming and ranching land prices: The region鈥檚 farmland price index fell to a still strong 64.0 from December鈥檚 67.2. The farmland price index has remained above growth neutral for every month since November 2019. 鈥淐reighton鈥檚 survey continues to point to solid, but slowing, growth in farmland prices. Approximately, 28.0% of bankers reported that farmland prices expanded from December levels,鈥� said Goss. 

Hiring: The new hiring index for January increased to growth neutral, 50.0, from December鈥檚 49.0. 鈥淎lmost 100% of bankers reported no change in hiring from December鈥檚 hiring activity,鈥� said Goss. 

Retail sales: Retail sales were below growth neutral for the last three months. The retail-sales index for January fell to 46.0 from 46.6 in December. 鈥淗igh consumer debt and elevated interest rates are cutting into retail sales in rural areas of the region,鈥� said Goss.

Confidence: Rural bankers remain very pessimistic about economic growth for their area over the next six months. The January confidence index sank to 38.5 from December鈥檚 43.3. Falling agriculture commodity prices and higher interest rates over the past several months continued to constrain business confidence. 

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After declining below growth neutral in March, the overall Rural Mainstreet Index for July expanded above the threshold for a fourth straight month, according to the July monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region鈥檚 overall reading in July slipped to 55.6 from June鈥檚 56.9. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

July 2023 Survey Results at a Glance:

• July鈥檚 overall reading, the Rural Mainstreet Index (RMI), rose above growth neutral for a fourth straight month. 
• Farmland prices expanded for the 34th straight month.
• On average, non-farm investors secured approximately 17.1% of farmland sales in the region, up from 9.1% reported by bankers in April 2022.
• More than nine of ten, or 92.5%, indicated that the Fed should cease raising rates.

鈥淎fter negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive but slow economic growth for the second quarter and has now started the third quarter on a healthy note,鈥� said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University鈥檚 Heider College of Business.

Farm equipment sales: The farm equipment-sales index for July stood at a tepid 50.0, which was up from 48.3 in June. 鈥淗igher borrowing costs have begun to negatively impact purchases of farm equipment,鈥� said Goss.

Farming and ranching land prices: The region鈥檚 farmland price index rose to 64.6 from 59.3 in June and 56.3 in May. This was the 34th straight month the index has advanced above 50.0. 

Bankers reported, on average, non-farm investors secured approximately 17.1% of farmland sales in their area over the past six months. This is almost double the 9.1% reported by bankers in April 2022 when the same question was asked. 

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