The Creighton University Rural Mainstreet Index for January fell from December's weak reading, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The Rural Mainstreet Index (RMI), which ranges between 0 and 100, sank to 34.8 from December's 41.5.
“This is the fifth straight month the overall index has declined, and the lowest reading since August 2009. Recent declines are the result of lower agriculture and energy commodity prices and downturns in manufacturing. Over the last 12 months, prices for farm products have fallen by approximately 15 percent, and for fuels by roughly 20 percent,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
“Sinking prices for grain and fuel have had moderate impacts on the region's ethanol industry. Approximately one-fifth of the bank CEOs reported that ethanol plants in their area had reduced production, while seven of 10 bankers indicated that ethanol plants had made no changes to their production levels,” said Goss.
Farming and ranching: The farmland and ranchland price index for January sank to 23.9 from December's 28.8. “This is the 26th straight month the index has moved below growth neutral. But, as in previous months, there is a great deal of variation across the region in the direction and magnitude of farmland prices with prices growing in some portions of the region,” said Goss.
The January farm equipment-sales index plummeted to a record low 7.0 from December's record low 8.8. “The strengthening U.S. dollar and global economic weakness have pushed grain prices down by 8 percent, and slaughter cattle prices 28 percent lower over the past 12 months. These weaker prices have discouraged farmers from buying additional agriculture equipment, and have negatively affected the agriculture equipment dealers and manufacturers in the region,” said Goss.
According to Jim Eckert, president of Anchor State Bank in Anchor, Illinois, “Recent weakness in grain prices and increases in inputs have caused area farmers to “pull in their horns.”
Source: Creighton University