Community Bankers of Iowa Monthly Banker Update July 2014 | Page 12

Creighton

Main Street
Economic Survey

U N I V E R S I T Y

Rural Mainstreet Index Weakens in June:

Ernie Goss

Sale of Farmland to Nonfarm Investors Declines
June Survey Results at a Glance:
•

Rural Mainstreet Index falls for the first time since
February of this year.

•

Farmland prices decline for seventh straight month, but
rate of decline slows.

•

Almost half of bankers reported higher beef and pork
prices are a big plus.

•

The percent of farmland sales for cash declined to 23.7
percent from 28.4 this time last year.

•

Over the past year, bankers reported that the percent of
farmland purchased by nonfarm investors sank to 14.4
percent from 19.7 percent.

OMAHA, Neb. – After moving below growth neutral in
February, the Rural Mainstreet economy has moved above the
50.0 threshold for four straight months, according to the June
survey of bank CEOs in a 10-state area. However, the index
was down from May signaling slower growth.
Overall: The Rural Mainstreet Index (RMI), which ranges
between 0 and 100, with 50.0 representing growth neutral, fell
to 53.6 from May’s 55.6.
“The overall index for the Rural Mainstreet Economy indicates
that economic conditions of the areas of the nation highly
dependent on agriculture and energy are positive, but
somewhat weaker compared to this time last year,” said
Ernie Goss, Ph.D., the Jack A. MacAllister Chair in Regional
Economics at Creighton University Heider College of Business.
Almost half, or 47.3 percent, of bankers reported that higher
beef and pork prices have increased overall economic
activity in their area. Most of the remaining bankers indicated
little livestock production in their area or very low livestock
inventories restrained gains.
However, some bankers anticipate a downside to higher
livestock prices. According to David Steffensmeier, president
of first Community Bank in Beemer, Neb., “High beef and pork
prices will cause the same problems that high grain prices did
the last few years - unreasonable expectations.”
Farming and Ranching: The farmland and ranchland-price
index for June rose to a weak 49.1 from May’s even weaker
46.7. “Despite the slight improvement, this is the seventh
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CBI BANKER UPDATE | JULY 2014

straight month that this index has moved below growth neutral.
Stronger farm commodity and grain prices over the last several
months appear to have put a floor under farmland prices. I
expect the index to move above growth neutral next month,”
said Goss.
The June farm-equipment sales index inched forward to 35.0
from 33.6 in May. The index has been below growth neutral
for 12 straight months. “Despite improving economic activity
on the regional farm, agriculture equipment and implement
dealers in the region are experiencing very weak sales to
farmers in the region. On the other hand, farm equipment
manufacturers continue to experience positive growth due to
healthy sales abroad,” said Goss.
This month bankers were asked what share of farmland that
was sold for cash and what share sold to investors and nonfarmers. On average, approximately 23.7 percent, or almost
one-fourth, of the farmland sales were cash purchases, which
is down from 28.4 percent last year at this time when the
survey asked this same question.
Bankers reported that the percent of farmland purchased by
nonfarm investors sank to 14.4 percent from 19.7 percent this
time last year. “Consistent with declines in farmland prices, we
are tracking less interest among non-farm investors in terms of
farmland purchases,” said Goss.
Banking: The June loan-volume index slipped to a still robust
74.6 from 75.4 in May. The checking-deposit index declined to
50.9 from May’s 54.8, while the index for certificates of deposit
and other savings instruments dipped to 39.4 from 40.3 last
month.
Hiring: Rural Mainstreet businesses continue to hire at a solid
pace, though the June hiring index declined slightly to 63.2
from May’s very healthy 64.0. “Currently the Rural Mainstreet
economy is adding jobs at a pace well above the long-term
average and significantly above the rate of growth in urban
areas of the region,” said Goss.
Confidence: The confidence index, which reflects
expectations for the economy six months out, advanced to
(Rural Mainstreet continued on next page)