Creighton University's Rural Mainstreet Index Rises for March: Almost Half Report Negative Flood Impacts

From Creighton's Heider School of Business:

March Survey Results at a Glance:

·    Overall index moves above growth neutral and to its highest level since December of last year.
·    More than half of supply managers reported negative economic impacts from flooding. 
·    Approximately 82.9 percent of bankers reported that the number one reaction to farmer financial stress has been restructuring loans.
·    On average, bankers expect approximately 18 percent of grain farmers to experience expenses to exceed revenue for 2019. Up only slightly from March 2018.

OMAHA, Neb. (March. 21, 2019) – The Creighton University Rural Mainstreet Index for March rose to its highest level since December of last year according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. A large share of survey responses occurred before most of the negative impacts of the recent floods became widely known.   

Overall: The overall index expanded to 52.9 from 50.2 in February. This is highest reading since December of last year, and the eleventh time in the past twelve months that the index has moved above growth neutral. The index ranges between 0 and 100 with 50.0 representing growth neutral.

“Our surveys over the last several months indicate the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Farming and ranching: The farmland and ranchland-price index for March slumped to 36.4 from February’s 42.2. This is the 64th straight month the index has fallen below growth neutral 50.0.

The February farm equipment-sales index was unchanged from February’s 32.8.  This marks 67th straight month that the reading has fallen below growth neutral 50.0.

Bankers were asked to estimate the percentage of grain farmers in their area that were projecting negative cash flow for 2019. On average, bankers expect approximately 18 percent of grain farmers to experience expenses to exceed revenue for 2019.  This is approximately one percent higher than last March’s results when the same question was asked.

However, Fritz Kuhlmeier, CEO of Citizens State Bank in Lena, Illinois, reported, “2019 will again be a critical point in the progression of deterioration of balance sheets from this depressed farm economy. Working capital buffers have been greatly reduced by negative cash flows the last four years with cash flows again stressed to negative for the current crop year.” ...

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