A new survey of rural bankers in Iowa and several other Midwest states suggests the ag economy is improving. Creighton University’s “Rural Mainstreet Index” hit a two-year high in May.
Economist Ernie Goss conducts the monthly survey and says lender confidence levels on the rural economy for May inched into positive territory for the first time since August 2015. Farm land prices and ag equipment sales were still negative, but they moved in a positive direction.
“It was still not a great report, but we’re talking about many months, in this case 20 straight months, of the overall index being below growth neutral. Moving above growth neutral was certainly good news,” Goss said.
Survey participants said, over the next five years, rising regulatory costs will be their top challenge. The number of rural bankers reporting farm foreclosures was the biggest risk doubled to one in ten, but Goss says it would take even lower commodity prices for that to be a major concern.
“At this point in time, agricultural commodity prices have at least stabilized. They’re not growing, but what we need to see of course is a good 20-to-25 percent increase in grain prices and livestock prices,” Goss said. Nearly 90 percent of bankers said low commodity prices were the biggest threat to the rural economy, slightly less than last year. Participants surveyed were located in Iowa, Illinois, Minnesota, Missouri, Nebraska, Colorado, Kansas, North Dakota, South Dakota and Wyoming.
(Reporting by Nicole Heslip, Brownfield Ag News)