Mainstreet Economy
Rural Mainstreet Economy Contracts Again
One in Five Grain Farmers Expected to Experience 2025 Negative Cash Flow
January 2025 Survey Results at-a-Glance:
• The overall Rural Mainstreet index fell below growth neutral for the 16th time in the past 17 months.
• For the eighth time in the past nine months, farmland prices sank.
• On average, bank CEOs expect annual cash rents of $278 per acre of non-irrigated, non-pasture farmland.
• Farm equipment sales dropped for the 18th straight month.
• On average, bankers expect approximately one in five grain farmers to experience negative cash flow for 2025.
• Approximately one-third of bank CEOs recommend that the Federal Reserve leave short-term interest rates unchanged in 2025. • According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for the first 11 months of 2024 rose by $673.4 million to $11.6 billion from the same period in 2023 for a 6.2% gain. • Mexico was the top destination for 2024 regional ag exports, accounting for 48.1% of total regional agriculture and livestock exports.
Creighton University Rural Mainstreet Index (RMI)
OMAHA, Neb. (Dec. 19, 2024) — After advancing above growth neutral last month for the first time since July 2023, the overall Rural Mainstreet Index (RMI) sank below the 50.0 reading in December, 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 plummeted to 39.6 from November’s
much-stronger 50.2. It was 11th time this year that the overall reading has fallen below growth neutral. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“In retrospect, and based on bank CEO comments, there appears to have been a significant November upturn resulting from the surprising Trump election results. That positive bump disappeared in December as continuing weak grain prices and farm income losses weighed on a significant proportion of farmers in the region,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
As reported by Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois, “Our area farmers continue to be hurt by increased input prices, higher interest rates and low commodity prices.”
Approximately one in four bankers reported that their local economy was either currently in a recession or would enter a downturn in 2025. The remaining three of four bankers expect slow growth but no recession for 2025.
Other comments from bankers for December:
• Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, said, “Based upon reluctance of Congress to pass the FARM Act and assist farmers of all sectors, the continued commodity price crisis will continue into 2025.”
• Larry Winum, CEO of Glenwood (Iowa) State Bank, said, “I want to express my condolences to the Bill McQuillan family with his recent passing. Bill was an awesome community banker and advocate for the industry. I know he worked closely with Dr. Goss to create the Mainstreet survey that we all benefit from each month. Rest in peace my friend!”
Farming and ranching land prices: For the 7th time in the past eight months, farmland prices sank. The region’s farmland index fell to 41.3 from November’s weak 44.4. “Elevated interest rates and higher input costs, along with below breakeven grain prices for some farmers in the region, have significantly reduced farmer demand for ag land,” said Goss.
Jeff Bonnett, CEO of Havana National Bank, said, “The pessimistic view in my responses comes from the fact that we are pretty much a "grain production" funding Ag bank. That is the makeup of the market that we serve.”
According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for 2024 year-to-date rose to $9.98 billion from $9.71 billion from the same period in 2023 for a 2.8% gain.
Farm equipment sales: The farm equipment sales index slumped to 14.3, its lowest level since October 2016 and down from 14.6 in November. “This is the 17th straight month that the index has fallen below growth neutral. High borrowing costs, tighter credit conditions and weak farm commodity prices are having a negative impact on the purchases of farm equipment,” said Goss.
Banking: The December loan volume index advanced to 69.6 from November’s solid 58.9. The checking deposit index fell to 47.8 from 59.3 in November. The index for certificates of deposits (CDs) and other savings instruments sank to 50.1 from 53.7 in November. Federal Reserve interest rate policies have boosted CD purchases above growth neutral for 25 straight months.
Roughly, 21.7% of bankers indicated that their bank had raised credit standards over the past 12 months.
Hiring: The new hiring index for December dropped to 45.7 from November’s 50.0.
Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The December confidence index slumped to 37.5 from November’s weak 46.4. “Weak agriculture commodity prices and negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to push banker confidence below growth neutral,” said Goss.
Home and retail sales: Home sales improved slightly to a weak 43.5 from 42.6 in November. On the other hand, regional retail sales, much like the nation’s, were stronger with a reading of 52.1, up briskly from November’s reading of 42.0.
The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index that covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy. Goss and the late Bill McQuillan, former Chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.
Below are the state reports
Colorado
The state’s Rural Mainstreet Index (RMI) for December fell to 54.2 from 60.3 in November. The farmland and ranchland price index for December declined to 54.7 from November’s 57.5. The state’s new hiring index decreased to 54.1 from November’s 65.6. According to trade data from the International Trade Association (ITA), Colorado exports of agriculture goods and livestock for 2024 year-to-date rose to $361.6 million from $145.0 million from the same period in 2023 for a 149.4% gain.
Illinois
The state’s December Rural Mainstreet Index (RMI) dropped to 46.5 from 54.3 in November. The farmland price index increased slightly to 42.9 from November’s 42.4. The state’s new hiring index declined to 43.1 from 49.1 in November. According to trade data from the ITA, Illinois exports of agriculture goods and livestock for 2024 year-to-date expanded to $3.8 billion from $3.6 billion from the same period in 2023 for a 4.1% gain. Jeff Bonnett, CEO of Havana National Bank, said, “Some are forecasting that commodity prices could remain at current levels into the 2026 crop year. That will not be a pleasant experience.”
Iowa
December’s RMI for the state slumped to 41.7 from 49.6 in November. Iowa’s farmland price index for December rose to 41.5 from 41.1 in November. Iowa’s new hiring index for December fell to 45.5 from 49.3 in November. According to trade data from the ITA, Iowa exports of agriculture goods and livestock for 2024 year-to-date sank to $1.27 billion from $1.28 billion from the same period in 2023 for a reduction of 1.3%.
Kansas
The Kansas RMI for December sank to 37.4 from November’s 45.3. The state’s farmland price index dropped to 37.4 from 42.3 in November. The new hiring index for Kansas declined to 44.0 from 47.9 in November. According to trade data from the ITA, Kansas exports of agriculture goods and livestock for 2024 year-to-date rose to $1.11 billion from $1.09 billion for the same period in 2023 for a 2.9% gain.
Minnesota
The December RMI for Minnesota fell to 53.2 from November’s 71.2. Minnesota’s farmland price index decreased to 47.6 from 50.5 in November. The new hiring index for December climbed to 53.0 from 51.2 in November. According to trade data from the ITA, Minnesota exports of agriculture goods and livestock for 2024 year-to-date fell to $881.7 million from $1.01 billion from the same period in 2023 for a reduction of 13.0%.
Missouri
The state’s December RMI fell to 50.6 from November’s 57.7. The farmland price index for December rose to 59.5 from 53.2 last month. The state’s new hiring gauge for December dropped to 54.5 from 56.7 in November. According to trade data from the ITA, Missouri exports of agriculture goods and livestock for 2024 year-to-date sank to $788.5 million from $1.00 billion from the same period in 2023 for a reduction of 21.9%.
Nebraska
The Nebraska Rural Mainstreet Index for December slumped to 36.5 from November’s 44.4. The state’s farmland price index for December sank to 40.0 from 42.9 in November. Nebraska’s new hiring index declined to 43.7 from 47.9. According to trade data from the ITA, Nebraska exports of agriculture goods and livestock for 2024 year-to-date expanded to $730.5 million from $620.3 million from the same period in 2023 for a 17.8% gain.
North Dakota
North Dakota’s RMI for December dropped to 47.4 from November’s 55.3. The state’s farmland price index sank to 43.1 from 46.0 in November. The state’s new hiring index fell to 47.5 from 51.3 in November. According to trade data from the ITA, North Dakota exports of agriculture goods and livestock for 2024 year-to-date rose to $916.6 million from $792.7 million from the same period in 2023 for a 15.6% gain.
South Dakota
The December RMI declined to 39.3 from November’s 47.1. The state’s farmland price index dipped to 40.7 from 43.7 in November. South Dakota’s December new hiring index dropped to 44.6 from November 48.5. According to trade data from the ITA, South Dakota exports of agriculture goods and livestock for 2024 year-to-date climbed to $120.0 million from $111.9 million from the same period in 2023 for a 9.1% gain.
Wyoming
The December RMI for Wyoming sank to 31.6 from 39.4 in November. The December farmland and ranchland price index decreased to 38.6 from November’s 41.5. Wyoming’s new hiring index slumped to 41.9 from 45.8 in November. According to trade data from the ITA, Wyoming exports of agriculture goods and livestock for 2024 year-to-date sank to $3.5 million from $4.8 million from the same period in 2023 or a reduction of 25.6%.
Tables 1 and 2 summarize the survey findings. Next month’s survey results will be released on the third Thursday of the month, January 16, 2025.
