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Rural Mainstreet Index Remains Healthy


Feb 25 - The Rural Mainstreet economy expanded for the fifth time in the past six months according to the monthly survey of bank CEOs in a 10-state area.   

Overall: The Rural Mainstreet Index , which ranges between 0 and 100 with 50.0 representing growth neutral, climbed to a healthy 58.2 from 55.6 in January. “The February RMI is down only slightly from the reading for February of last year. I anticipate that economic growth for the region will continue on a slow but positive pace,” said Creighton University economist Ernie Goss.

Farming: After peaking at 83.9 in November of last year, the farmland-price index has now declined for three straight months. While the index declined, it was still strong at 67.0, down from January’s 71.5. This is the 37th consecutive month that the farmland-price index has been above growth neutral. The farm equipment-sales index rose to 65.8 from 63.8 in January.

“Based on our surveys over the past several months, 2013 is stacking up to be a good year for farm income according to bankers. This is showing up in healthy growth in farmland prices and the sales of farm equipment,” said Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton. 

Jeffrey Gerhart, CEO of the Bank of Newman Grove, Newman Grove, Neb., and chairman of the Independent Community Bankers of America said, “We are watching to see how the area pastures will do this spring. Some pastures may not be able be grazed this year. Hay crops could also be significantly impacted should the drought continue.”

This month bankers were asked several questions related to farm commodity prices. First, bankers were asked what corn price would put farm loan repayments in jeopardy. On average, bankers reported that corn prices below $3.86 would threaten repayment of farm loans. Second, bankers were asked the breakeven corn price for farmers that rent their land. On average bankers estimated a breakeven corn price of $4.84 per bushel. 

The University of Illinois Department of Agricultural Economics projected 2013 corn prices of $5.73 per bushel ( “Given this projection along with current strong balance sheets and cash flow of farmers, agriculture repayments and profitability for farmers should be very similar to 2012.  Even so, significant changes in Federal Reserve policy or international trade disruptions could pose a threat to the Rural Mainstreet economy in 2013,” said Goss.

According to Dale Bradley, CEO of The Citizens State Bank, Miltonvale, Kan., “Farmers should be very cautious in 2013 and 2014 and be conservative from an economic standpoint.”

Banking: For the fourth time in the past five months, the loan-volume index remained below growth neutral. The index rose to a weak 46.7 from January’s frail 39.0 and well ahead of last February’s 31.0. The checking-deposit index slipped to 67.2 from 78.1 in January while the index for certificates of deposit and other savings instruments rose to 47.6 from 42.2 in January. “Banking data continue to reflect healthy farm income and an expanding Rural Mainstreet economy,” said Goss.

Hiring: February’s hiring index advanced to 54.9 from 52.4 in January. “New hiring in the region continues to expand at a modest pace. While job growth remains slow, it is well up from one year ago when job growth was at virtual standstill,” said Goss.

Confidence: The confidence index, which reflects expectations for the economy six months out, softened to 51.7 from 55.5 in January. “The failure to pass a new farm bill and the impending spending sequestration combined to lower confidence in future Rural Mainstreet economic growth,” said Goss.

Home and retail sales: The February home-sales index soared to 65.0 from January’s 55.6. The February retail-sales index advanced to a feeble 46.6 from January’s 44.5. “Much like the national numbers, Rural Mainstreet retailers are experiencing cuts in overall sales since the beginning of the year,” said Goss.

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 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, president of CNB Community Bank of Greeley, Neb., created the monthly economic survey in 2005.

Colorado: For a fifth straight month, Colorado’s Rural Mainstreet Index remained above 50.0. The February RMI dipped to 61.1 from 64.1 in January. The farmland and ranchland price index slipped to 70.2 from January’s 70.6. Colorado’s hiring index for February expanded to 54.6 from January’s 50.0.

Illinois: For a fifth consecutive month, the RMI for Illinois moved above growth neutral. The February index improved slightly to 61.4 from January’s 61.3. Farmland prices tumbled to a healthy 71.2 from January’s 76.7. The state’s new-hiring index increased to 55.3 from 54.1. 

Iowa: The February RMI for Iowa advanced to 59.8 from January’s 59.0. The farmland-price index declined to 70.4 from 75.4 in January. Iowa’s new-hiring index for February improved to 54.7 from January’s 53.2.

Kansas: The Kansas RMI for February sank to 47.2 from 53.7 in January. The farmland-price index fell to 60.0 from January’s 75.4. The state’s new-hiring index declined to 47.8 from 48.5 in January. 

Minnesota: The February RMI for Minnesota rose to 73.4 from 71.2 in January. Minnesota’s farmland-price index declined to 83.3 from January’s 85.1. Minnesota’s new-hiring index advanced to 63.3 from January’s 59.7.

Missouri: The February RMI for Missouri soared to 64.5 from January’s 51.5. The farmland-price index for February decreased slightly to 67.5 from January’s 67.8. Missouri’s new-hiring advanced to 52.8 from 48.2 in January.

Nebraska: After moving below growth neutral for January, Nebraska’s Rural Mainstreet index broke above growth neutral for February. The February RMI expanded to 52.7 from January’s 48.8. The farmland-price index slipped to 60.7 from January’s 66.2. Nebraska’s new-hiring index increased to a weak 48.3 from January’s 47.1.

North Dakota: The North Dakota RMI for February decreased to a regional high of 78.9 from 83.3 in January. The farmland-price index advanced to 86.4 from 85.2 in January. North Dakota’s new-hiring index decreased to 75.1 from 78.3 in January. 

South Dakota: The February RMI for South Dakota improved to 54.1 from January’s 53.5. The farmland price index decreased to 65.0 from 71.0 in January. South Dakota's new-hiring index for February advanced to 51.1 from 50.3 in January. 

Wyoming: The February RMI for Wyoming declined to 54.1 from 54.8 in January. The February farmland and ranchland price index decreased to 64.6 from 70.5 in January. Wyoming’s new-hiring index climbed above growth neutral with a February reading of 51.9 which was up from January’s 51.0.