From Creighton's Heider College of Business, October 21:
October Survey Results at a Glance:
- Overall index moved above growth neutral for the 11th straight month indicating healthy growth for the region.
- Almost one-third of bankers reported congestion at transportation hubs represented the greatest challenge to farmers.
- More than 8 of 10 bank CEOs reported farmers in their area were in solid cash position.
- Farmland prices continue to accelerate at a very strong pace.
- Economic confidence declined for a fourth straight month.
- Agriculture exports continue to boost commodity prices and farm income in the region.
OMAHA, Neb. (Oct. 21, 2021) – For the 11th straight month, the Creighton University Rural Mainstreet Index (RMI) remained above growth neutral, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The region’s overall reading for October rose to 66.1 from September’s healthy 62.5. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. USDA data show that 2021 year-to-date agriculture exports are more than 25.4% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
“More than eight of 10 bankers expect, if implemented, the stepped-up basis portion of President Biden’s $3.5 trillion bill before Congress to have a negative impact on the Rural Mainstreet economy,” said Goss.
Farming and ranching: The region’s farmland price index slid to a very strong 81.5 from September’s record high 85.2. October’s reading represented the 14th straight month that the index has moved above growth neutral.
The October farm equipment-sales index slipped to a strong 64.8 from 66.0 in September. Readings over the last several months represent the strongest consistent growth since 2012.
Bank CEOs indicated that congestion at domestic transportation hubs represented the greatest supply chain disruption for farmers.
Banking: The October loan volume index fell to 53.6 from September’s 58.9. The checking-deposit index advanced to 66.1 from September’s 58.8, while the index for certificates of deposit, and other savings instruments slumped to 32.1 from a weak 37.5 in September.
More than eight of 10, or 82.1%, of bankers indicated farmers in their area were in solid cash position with little need for borrowing. The remaining 17.9% of bankers reported farmer cash positions little changed from past years.
However, Steve Simon, CEO of South Story Bank in Slater-Huxley, Iowa said, “Year-end borrowing as farmers look to pre-pay rising input costs.”....
.... MUCH MORE
That last line "pre-pay rising input costs" is a classic response to inflation. It is also a survival mechanism:Input prices going up means one of two things for next year: 1) either output prices also go up or 2) farmers go broke (and then output prices go up)—from the introduction to October 21's "Nitrogen Fertilizer Trends: Urea Price Climbs 26% Since Mid-September, a $147-Per-Ton Jump (CF)"
