Close MenuClose
Close Menu

Mainstreet Economy

Rural Mainstreet Economy Expanding: Farmland Price Growth Soars to Another Record High

December Survey Results at a Glance:

  • Overall index moved above growth neutral for the 13th straight month indicating healthy, consistent growth for the region. 
  • For a third straight month, the farmland price index rocketed to another record high. 
  • According to Bank CEOs, annual cash rents for non-irrigated, non-pasture farmland soared to $262 from $218 in February 2020, a month before the pandemic onset.
  • Only 6.7% of bankers indicated that their local economy was contracting. 
  • Farm equipment sales climbed to highest level in more than 10 years.

OMAHA, Neb. (Dec. 16, 2021) – For the 12th straight month, the Creighton University Rural Mainstreet Index (RMI) remained above growth neutral, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. 

Overall: The region’s overall reading for December slipped to 66.7 from November’s 67.7. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral. 

“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. USDA data show that 2021 year-to-date agriculture exports are more than 20.7% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Todd Douglas, CEO of First National Bank in Pierre, South Dakota, reported, “With the paycheck protection program (PPP) monies, and good commodity prices, even with some areas of reduced yields due to lack of moisture, agriculture borrowers should be in good shape for 2022.”

“Seven of 10 bankers described their local economy as expanding, while only 6.7% indicated that their local economy was in a modest economic downturn,” said Goss. 

Farming and ranching: The region’s farmland price index improved to a very strong, and record high of 90.0 from October’s 85.5, also a record high. December’s reading represented the 15th straight month the index has moved above growth neutral. 

According to Bank CEOs, annual cash rents for non-irrigated, non-pasture farmland soared to $262 from $218 one month prior to the pandemic in February 2020. 

But there were warnings from some bankers. Jeff Bonnett, CEO of Havana State Bank in Havana Illinois, said, “Inflation is real and affecting folks in our service areas.”

Confirming the inflation outlook, Steve Simon, CEO of South Story Bank & Trust in Huxley, Iowa, reported, “Yields and prices ended being up over projections for 2021 but it appears land costs and all crop inputs will be up significantly in 2022.”

The December farm equipment-sales index soared to 74.1 from 62.1 in November. This is the 13th straight month that the index has advanced above growth neutral and the strongest index recorded since April 2011.

Banking: The December loan volume index expanded to 61.7 from November’s 53.2. The checking-deposit index declined to 68.3 from November’s 71.0, while the index for certificates of deposit, and other savings instruments slumped to 26.7 from 32.3 in November. 

Jim Brown, CEO of Hardin County Savings Bank in Eldora, Iowa, reported, “(Seeing) very strong working capital and net worth gains even from marginal customers.”

Only 3.3% of bankers reported that farmers in their area were in financial distress with increased need for borrowing. 

Hiring: The new hiring index climbed to a very healthy 72.4 from 67.7 in November. Labor shortages continue to be a significant issue constraining growth for Rural Mainstreet businesses. 

Despite recent strong job gains, U.S. Bureau of Labor Statistics data indicate that, compared to its pre-COVID-19 level, Rural Mainstreet has lost 2.5% of its nonfarm employment (non-seasonally adjusted). 

Confidence: After declining for five consecutive months, the confidence index, which reflects bank CEO expectations for the economy six months out, rose to 55.2 from 48.4 in November. 

Home and retail sales: The home-sales index climbed to 72.4 from November’s healthy 65.0. The retail-sales index for December rose to 68.3 from 58.1 in November. “Healthy farm prices and federal stimulus spending are having very positive impacts on Rural Mainstreet retail sales and home sales,” said Goss. 

The survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005 and launched in January 2006.

Below are the state reports:

Colorado: Colorado’s Rural Mainstreet Index (RMI) for December declined to 58.7 from November’s 64.1. The farmland and ranchland-price index expanded to 88.2 from 83.6 in November. Colorado’s hiring index for December dipped to 66.8 from 67.2 in November. Despite recent strong job gains, U.S. Bureau of Labor Statistics data indicate that over the last 12 months, Colorado’s Rural Mainstreet has experienced a 1.0% gain in nonfarm employment (non-seasonally adjusted). 

Illinois: The December RMI for Illinois climbed to 78.5 from 74.5 in November. The farmland-price index advanced to 92.0 from 85.5 in November. The state’s new-hiring index advanced to 71.5 from November’s 70.9. U.S. Bureau of Labor Statistics data indicate that over the past 12 months, Illinois’ Rural Mainstreet has experienced a 4.4% gain in nonfarm employment (non-seasonally adjusted). 

Iowa: The December RMI for Iowa improved to 71.4 from 70.9 in November. Iowa’s farmland-price index jumped to 91.4 from November’s 84.9. Iowa’s new-hiring index for December rose to 70.7 from 69.6 in November. U.S. Bureau of Labor Statistics data indicate that over the past 12 months, Iowa’s Rural Mainstreet has experienced a 1.7% gain in nonfarm employment (non-seasonally adjusted). Jim Brown, CEO of Hardin County Savings Bank in Eldora, reported, “Crop yields are amazing for the lack of moisture, except for very few instances depending on type of soil.”

Kansas: The Kansas RMI for December slipped to 63.2 from November’s 64.1. The state’s farmland-price index rose to 89.6 from November’s 83.6. The new-hiring index for Kansas climbed to 68.5 from 67.2 in November. U.S. Bureau of Labor Statistics data indicate that over the past 12 months, Kansas’ Rural Mainstreet has experienced a 2.3% gain in nonfarm employment (non-seasonally adjusted). 

Minnesota: The December RMI for Minnesota fell to a very healthy 82.3 from 83.9 in November. Minnesota’s farmland-price index climbed to 95.5 from November’s 87.2. The new-hiring index for December rose to 75.8 from 74.3 in November. U.S. Bureau of Labor Statistics data indicate that Minnesota’s Rural Mainstreet economy has experienced a very healthy 6.2% gain in its nonfarm employment (non-seasonally adjusted). 

Missouri: The November RMI for Missouri increased to 52.5 from 48.2 in October. The farmland-price index climbed to 81.5 from October’s 77.0. The state’s hiring gauge dipped to 62.9 from October’s 65.3. Compared to its pre-COVID-19 level, recent strong job gains for Missouri’s Rural Mainstreet economy has generated a 0.3% gain in its nonfarm employment (non-seasonally adjusted). 

Nebraska: The Nebraska RMI for December sank to 71.9 from November’s 74.1. The state’s farmland-price index climbed to 92.3 from last month’s 85.4. Nebraska’s new-hiring index improved to 71.8 from 70.8 in November. U.S. Bureau of Labor Statistics data indicate that Nebraska’s Rural Mainstreet economy has experienced a very healthy 3.7% gain in its nonfarm employment (non-seasonally adjusted). Jim Stanosheck, CEO of the State Bank of Odell said, “Our corner of the world saw dry conditions with yields about average. Where there was rain, yields were well above average.”

North Dakota:The North Dakota RMI for December decreased to 54.3 from 57.8 in November. The state’s farmland-price index advanced to 86.8 from 82.7 in November. The state’s new-hiring index declined to 65.1 from November’s 65.3. U.S. Bureau of Labor Statistics data indicate that North Dakota’s Rural Mainstreet has experienced a weak 0.5% gain in its nonfarm employment (non-seasonally adjusted). 

South Dakota: The December RMI for South Dakota slumped to 59.9 from 67.5 in November. The state’s farmland-price index expanded to 88.6 from 84.2 in November. South Dakota’s December hiring index decreased to 67.2 from 68.4 in November. U.S. Bureau of Labor Statistics data indicate that South Dakota’s Rural Mainstreet has experienced a solid 1.7% gain in its nonfarm employment (non-seasonally adjusted). 

Wyoming: The December RMI for Wyoming fell to 56.5 from 61.9 in November. The December farmland and ranchland-price expanded to 87.5 from 83.2 in November. Wyoming’s new-hiring index declined to 65.9 from November’s 66.4. U.S. Bureau of Labor Statistics data indicate that Wyoming’s Rural Mainstreet has experienced a weak 0.5% gain in its nonfarm employment (non-seasonally adjusted). 

Tables 1 and 2 summarize the survey findings. Next month’s survey results will be released on the third Thursday of the month, Jan. 20.

Tables 1 and 2 summarize the survey findings.