Mainstreet Economy

Rural Mainstreet Farmland Prices Show Strongest Growth Since 2013: Farm Equipment Sales Highest Since June 2013

December Survey Results at a Glance:

  • Overall index rose to its second highest reading in the past 10 months.
  • For the first time since June 2013, the farm equipment-sales index rose above growth neutral.
  • For the first time since 2013, the farmland price index rose above growth neutral for three straight months.
  • Bankers ranked water availability as the top 2021 farm economy issue; farm labor cost/availability was ranked as the second biggest issue or concern.
  • Among 10 farm concerns for 2021, farm income and farm liquidity were the two issues of least concern.
  • Growth in agriculture income pulled farmer borrowing down for a second straight month.

OMAHA, Neb. (Dec. 17, 2020) - For the second time in the past three months, the Creighton University Rural Mainstreet Index (RMI) climbed 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, the index increased to its second highest level in the past 10 months.

Overall: The overall index for December rose to 51.6 from November’s 46.8, but was down from October’s 53.2. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Farming and ranching: For a third straight month, the farmland price index advanced above growth neutral. The December reading was unchanged from November’s solid 55.0. This is first time since 2013 that Creighton’s survey has recorded three straight months of rising farmland prices.

The December farm equipment-sales index increased to 50.2, its highest level since June 2013, and up from 42.9 in November. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the month.

Banking: Bankers once again reported anemic loan volumes. The December loan volume index expanded to 43.7 from November’s record low 25.8. The checking-deposit index dropped to 78.1 from November’s record high 87.1, while the index for certificates of deposit, and other savings instruments fell to 42.2 from 46.8 in November.

Hiring: The new-hiring index slipped to 50.0 from November’s 53.2. Data from the U.S. Bureau of Labor Statistics indicate that nonfarm employment levels for the Rural Mainstreet economy are down by 95,000 (non-seasonally adjusted), or 2.2%, compared to pre-COVID-19 levels, and by 216,000, or 4.8%, from 12 months earlier.

“It will take many months of above growth neutral readings to get back to pre-COVID-19 employment levels for the region,” said Goss.

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out, soared to 62.9 from November’s 50.0. “Federal farm support payments, improving gain prices, and advancing exports have supported confidence offsetting pessimism from the impact of the pandemic,” said Goss.

Home and retail sales: The home-sales index dipped to a still strong 71.0 from 73.3 in November. The retail-sales index for December increased to a frail 40.6 from 37.9 in November. “Higher unemployment and business closures linked to Covid-19 continue to harm the region’s retailers,” said Goss.

Bankers were to indicate their top 10 concerns for 2021 and water availability and was the top concern. Not surprisingly, with strong 2020 farm income and farm commodity prices, farm financial conditions were of least concern for 2021 as judged by bank CEOS. (Results indicated in table at end of report)

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state area are surveyed regarding current economic conditions in their communities and their projected economic outlooks six months down the road. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

This 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.

Below are the state reports:

Colorado: Colorado’s Rural Mainstreet Index (RMI) for December improved to 42.9 from November’s 40.0. The farmland and ranchland-price index slipped to 50.5 from 52.1 in November. Colorado’s hiring index for December sank to 46.7 from November’s 50.3. Over the past 12 months, Colorado’s Rural Mainstreet economy has lost 7.4% of its nonfarm employment compared to a 3.8% loss for urban areas of the state.

Illinois: The December RMI for Illinois increased to 51.5 from 50.2 in November. The farmland-price index slumped to 54.8 from November’s 57.2. The state’s new-hiring index sank to 51.0 from 55.5 in November. Over the past 12 months, Illinois’ Rural Mainstreet economy has lost 5.3% of its nonfarm employment compared to a 7.1% loss for urban areas of the state.

Iowa: The December RMI for Iowa increased to 50.2 from November’s 47.4. Iowa’s farmland-price index rose to 54.1 from 53.4 in November. Iowa’s new-hiring index for December fell to 50.3 from 54.0 in November. Over the past 12 months, Iowa’s Rural Mainstreet economy has lost 5.0% of its nonfarm employment compared to a 4.5% loss for urban areas of the state.

Kansas: The Kansas RMI for December increased to 52.7 from 52.2 in November. The state’s farmland-price index sank 55.4 from November’s 58.2. The new-hiring index for Kansas fell to 51.6 from 56.4 in November. Over the past 12 months, Kansas’ Rural Mainstreet economy has lost 3.7% of its nonfarm employment compared to a 3.5% loss for urban areas of the state.

Minnesota: The December RMI for Minnesota slumped to 46.3 from November’s 52.1. Minnesota’s farmland-price index dropped to 52.2 from 54.4 in November. The new-hiring index for December fell to 48.3 from November’s 52.7. Over the past 12 months, Minnesota’s Rural Mainstreet economy has lost 6.6% of its nonfarm employment compared to a 6.2% loss for urban areas of the state.

Missouri: The December RMI for Missouri jumped to 60.3 from 57.3 in November. The farmland-price index dipped to 59.2 from 60.8 in November. The state’s hiring gauge declined to 55.4 from 59.0 in November. Over the past 12 months, Missouri’s Rural Mainstreet economy has experienced an increase in the size of its nonfarm employment by 0.8%, compared to a 4.7% loss for urban areas of the state.

Nebraska: The Nebraska RMI for December jumped to 54.2 from 45.1 in November. The state’s farmland-price index declined to 56.2 from last month’s 58.7. Nebraska’s new-hiring index fell to 52.3 from 56.9 in November. Over the past 12 months, Nebraska’s Rural Mainstreet economy has lost 2.6% of its nonfarm employment compared to a 2.5% loss for urban areas of the state.

North Dakota: The North Dakota RMI for November dropped to 36.8 from October’s 42.7. The state’s farmland-price index improved to 50.5 from 45.8 in October. The state’s new-hiring index sank to 48.7 from October’s 50.1. Over the past 12 months, North Dakota’s Rural Mainstreet economy has lost 7.4% of its nonfarm employment compared to a 3.8% loss for urban areas of the state.

South Dakota: The December RMI for South Dakota advanced to 57.7 from 55.9 in November. The state’s farmland-price index declined to 57.9 from November’s 60.1. South Dakota’s December hiring index sank to a solid 57.9 from 58.3 in November. Over the past 12 months, South Dakota’s Rural Mainstreet economy has lost 1.3% of its nonfarm employment compared to a 4.4% loss for urban areas of the state.

Wyoming: The December RMI for Wyoming improved to 49.4 from November’s 41.2. The December farmland and ranchland-price index fell to 53.8 from 56.1 in November. Wyoming’s new-hiring index slumped to 49.9 from November’s 54.3. Over the past 12 months, Wyoming’s Rural Mainstreet economy has lost 4.3% of its nonfarm employment compared to a 4.7% loss for urban areas of the state.

Next month’s survey results will be released on the third Thursday of the month, Jan. 21.

Tables 1 and 2 summarize the survey findings. Table 1 presents indices for each factor, while Table 2 lists bankers top 2021 farming concerns with a 10 indicating most important, and a 1 indicating the least important issue or concern. As scored, bankers expect water availability to be the top 2021 farming issue, and farm labor cost and availability as the second most important 2021 farm concern. Farmer liquidity was the least important concern.