Rural Mainstreet Economy Falls to Four-Year Low

October 2024 Survey Results at a Glance:
The Rural Mainstreet Index plummeted to its lowest level since the beginning of the pandemic and fell below growth neutral for the 14th straight month.
Approximately, 85.2% of bankers indicated that former President Donald Trump would be the most supportive of the rural economy with 3.7% indicating Vice-President Kamala Harris and the remaining 11.1% naming another candidate.
For the fifth time in the past six months, farmland prices sank.  
Farm equipment sales sank for the 15th straight month.
Approximately, 61.5% of bankers indicated that the financial position of farmers in their service area had deteriorated over the past six months.
According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024 year-to-date climbed to $7.8 billion from $7.7 billion from the same period in 2023, for growth of 1.2%.
 
OMAHA, Neb. (Oct. 17, 2024) — For a 14th straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the October 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 October sank to 35.2 from 37.5 in September. It was the lowest reading since the beginning of the pandemic in spring 2020. The index ranges between 0 and 100, with a reading of 50.0 that represents growth neutral.

“Weak agriculture commodity prices, sinking agriculture equipment sales, elevated input costs and falling farmland prices pushed the overall reading below growth neutral for the 14th straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Bank CEOs were asked which presidential candidate would be the most supportive of the Rural Mainstreet Economy. Approximately, 85.2% indicated former President Trump would be the most supportive of the rural economy with 3.7% naming Vice-President Harris and the remaining 11.1% identifying another candidate.

Approximately, 61.5% of bankers indicated that the financial position of farmers in their service area had deteriorated over the past six months. The remaining 38.5% reported that farmers’ financial position was unchanged over the past six months.

Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, said, “Not to sound like a broken record, but even with above average yields on corn and soybeans, most local farm producers will still cash flow at less than break-even prices.”

Other comments from bankers for October:
-Terry Engelken, Vice President of Washington State Bank in Washington, Iowa, reported that “Corn and soybean yields are excellent.”
-Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois, said, “Yields are surprisingly good in our area, considering the dry conditions we had most of the late growing season. Field and combine fires are very common, due to continued dry conditions.”
-Anonymous banker/farmer, “We cannot survive doing grains at these price levels. Cattle helps, but few have cow/calf operations where there are good margins. I am not so optimistic about these markets.”
 
Farming and ranching land prices: For the fifth time in the past six months, farmland prices sank. The region’s farmland index fell to 38.5, a six-year low, from September’s 43.8. “Elevated interest rates and higher input costs along with below breakeven grain prices have significantly reduced farmer demand for ag land,” said Goss.

On average, bank CEOs reported that over the past six months, only 18.1% of farmland buyers were non-farmer investors. 

According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for 2024 year-to-date rose to $7.8 billion from $7.7 billion from the same period in 2023, for a 1.2% gain.

Farm equipment sales: The farm equipment sales index for October slumped to 18.8 from 19.0 in September. “This is the 15th straight month that the index has fallen below growth neutral. Higher borrowing costs, tighter credit conditions and farm income losses are having a negative impact on the purchases of farm equipment,” said Goss.

Banking: The October loan volume index expanded to a strong 73.1 from 68.8 in September. The checking deposit index soared to 63.7 from 41.3 in September. The index for certificates of deposits and other savings instruments climbed to 63.5 from 56.5 in September. The Federal Reserve’s higher interest rate policies have boosted CD purchases above growth neutral for 23 straight months.

Hiring: The new hiring index for October expanded to 50.0 from 43.5 in September.

Confidence: Rural bankers remain very pessimistic about economic growth for their area over the next six months. The October confidence index increased to a weak 29.6 from September’s 22.9. “Weak agriculture commodity prices and negative farm cash flow, combined with downturns in farm equipment sales over the past several months, continued to constrain banker confidence,” said Goss.

Home and retail sales: Home sales rose to a weak 46.3 from 43.8 in September. Likewise, retail sales in the region, much like that for the nation, were very weak with an October index of 36.0, up from 30.4.

“High consumer debt, elevated interest rates and weaker farm income are cutting into retail sales for the Rural Mainstreet Economy,” 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 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 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 October fell to 51.6 from 61.6 in September. The farmland and ranchland price index for October sank to 52.3 from 60.0 in September. The state’s new hiring index climbed to 65.9 from 63.3 in September. According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for 2024 year-to-date rose to $255.1 million from $108.3 million from the same period in 2023, or a 135.5% gain.

Illinois: The state’s October RMI sank to 38.1 from September 43.9. The farmland price index dropped to 38.8 from 45.7 in September. The state’s new hiring index fell to 45.1 from 45.2 in September. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date sank to $2.9 billion from $3.0 billion from the same period in 2023, or a 2.8% reduction.

Iowa: September’s RMI for the state decreased to 37.1 from 44.0 in September. Iowa’s farmland price index for October sank to 38.6 from 45.7 in September. Iowa’s new hiring index for October  rose to 52.8 from September’s 52.4. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date sank to $1.0 billion from $1.1 billion from the same period in 2023, or a 2.3% reduction.

Kansas: The Kansas RMI for October dipped to 33.4 and 34.1 in September. The state’s farmland price index fell to 37.5 from 42.3 in September. The new hiring index for Kansas expanded to 47.6 from 39.6 in September. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date rose to $881.2 million from $842.9 from the same period in 2023, or a 4.5% gain.

Minnesota: The October RMI for Minnesota increased to 49.8 from 48.1 in September. Minnesota’s farmland price index dropped to 42.1 from 42.2 last month. The new hiring index for October climbed to 53.3 from 43.2 in September. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date fell to $751.4 million from $821.7 million from the same period in 2023, or an 8.6% reduction.

Missouri: The state’s October RMI sank to 52.4 from September’s 53.5. The farmland price index for October fell to 57.2 from 63.8 last month. The state’s new hiring gauge for October expanded to 71.9 from 63.8 in September. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date sank to $605.8 million from $782.0 million from the same period in 2023, or a 22.5% reduction.

Nebraska: The Nebraska RMI for October slumped to 33.5 from 35.1 in September. The state’s farmland price index for October dropped to 36.9 from 42.7 in September. Nebraska’s October new hiring index increased to 45.8 from 42.7. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date expanded to $571.8 million from $395.3 million from the same period in 2023, or a 44.6% gain.

North Dakota: North Dakota’s RMI for October sank to 39.2 from 41.3 in September. The state’s farmland price index sank to 39.3 from 45.0 in September. The state’s new hiring index rose to 49.8 in October from 41.4 in September. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date rose to $706.3 million from $628.2 million from the same period in 2023, or a 12.4% gain.

South Dakota: The October RMI dropped to 41.8 for South Dakota from 46.0 in September. The state’s farmland price index fell to 39.9 from 46.3 in September. South Dakota’s October new hiring index climbed to 50.5 from October’s 46.5. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date climbed to $98.2 million from $91.0 million from the same period in 2023, or a 7.9% gain.

Wyoming: The October RMI for Wyoming sank 34.2 from 34.8 in September. The October farmland and ranchland price index dropped to 33.3 from September’s 41.6. Wyoming’s new hiring index increased to 42.1 from 40.6 in September. According to trade data from the ITA, regional exports of agriculture goods and livestock for 2024 year-to-date sank to $2.1 million from $3.9 million from the same period in 2023, or a 45.6% reduction.