Community Bankers of Iowa Monthly Banker Update October 2013 | Page 14
Creighton
Main Street
Economic Survey
U N I V E R S I T Y
Growth Slows for Rural Mainstreet Economy:
Farm Equipment Sales Decline Again
September Survey Results at a Glance:
• Rural Mainstreet Index indicates rural economy advancing
at a slower pace.
• Bank CEOs reported that farmland cash rents expanded
by 9.9 percent over the past year.
• Farm equipment sales declined below growth neutral for a
second straight month.
• Economic confidence plunged below growth neutral.
• Farmland price index declined for the ninth time in the past
10 months.
While growth for the Rural Mainstreet economy remains positive,
it slowed a bit in September, according to the monthly survey of
bank CEOs in a 10-state area.
Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100 with 50.0 representing growth neutral, declined
to 52.4 from 55.8 in August.
“Lower grain prices this year are slowing the growth in the Rural
Mainstreet economy. Additionally, 39.4 percent of bankers this
month indicated that lower grain prices have encouraged farmers to store grain and hold for higher prices later. This strategy is
likely to payoff for the farmer given the Federal Reserve’s decision this week to continue their current stimulus program. This
$85 billion per month Fed bond program will be supportive of
higher agriculture commodity prices and the farm economy in the
months ahead,” said Ernie Goss, the Jack A. MacAllister Chair in
Regional Economics at Creighton University.
According to Scott Tewksbury, CEO of Heartland State Bank in
Edgeley, N.D., “We are looking at reduced production for 2013
due to late season drought, which is why I anticipate the economy to be down in the next six months.”
As indicated by Jeff Bonnett, president of Havana National Bank
in Havana, Ill., “We do anticipate a significant increase in stored
or deferred grain sales from this year’s harvest.”
Farming: The farmland-price index declined for the ninth time in
the past 10 months. The September index fell to 54.0 from 55.8
in August. “Our farmland-price index has been above growth
neutral since February 2010. However, lower farm commodity
prices are slowing growth in farmland prices. The Federal Reserve’s decision to make no changes to their expansionary monetary policy is definitely bullish for agriculture. Most economists,
including me, expected the Fed to begin tapering QE3. Thus, the
Fed’s lack of action in September will be supportive of agriculture
12
CBI Banker Update
.
October 2013
Ernie Goss
commodity prices, farm income and farmland prices in the weeks
and months ahead,” said Goss.
This month bankers were asked how much farmland cash rents
expanded in their area over the last year. On average, bankers
reported that cash rents grew by 9.9 percent from this time last
year.
Farm equipment sales for September once again declined. The
index slumped to 48.3 from
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