From Creighton's Heider College of Business, May 19:
- The overall index fell to its lowest level since February 2021 but remained above growth neutral for the 18th straight month.
- Escalating costs of farm inputs pushed borrowing up to its highest reading since May 2020.
- On average, cash rents have risen by 9.6% to $250 per acre for non-irrigated crop land over the past 12 months.
- Approximately 40% of bankers expect 2022 farm income to be greater than 2021 farm income, while 25.9% of bankers expect 2022 farm income to be less than last year’s farm income.
- The depreciation of the U.S. dollar against the Mexican peso has been a stimulus to exports to Mexico, the top destination for the region’s farm products.
OMAHA, Neb. (May 19, 2022) — The Creighton University Rural Mainstreet Index (RMI) fell from April’s healthy reading and remained above growth neutral for the 18th straight month, 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 May declined to 57.7, its lowest level since February 2021 and down from April’s 62.0. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
“Much like the nation, the growth in the Rural Mainstreet economy is slowing. Supply chain disruptions from transportation bottlenecks and labor shortages continue to constrain growth. Farmers and bankers are bracing for escalating interest rates — both long-term and short-term,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Farming and Ranching: The region’s farmland price index for May sank to a still strong 72.0 from 80.0 in April, marking the 20th straight month that the index has moved above growth neutral. Over the past several months, the Creighton survey has registered the most consistent and strongest growth in farmland prices since the survey was launched in 2006.
On average, cash rents have risen by 9.6% to $250 per acre for non-irrigated crop land over the past 12 months, according to bankers.
In 2021, the 10-state region exported $10.6 billion of farm commodities, including livestock. Approximately 57.2% of those exports went to Mexico. Despite the rapid rise in the dollar against most currencies, the dollar has depreciated by almost 17% against the Mexican peso. This has made Rural Mainstreet agriculture products more competitively priced in Mexico.
Jim Eckert, president of Anchor State Bank in Anchor, Illinois, reported that “wet weather has our area farmers way behind, but it's been a bit drier the last week or so. Some soybeans and almost no corn have been planted so far.”
Farming and ranching: The region’s farmland price index for April climbed to a strong 80.0 from 78.0 in March, marking the 19th straight month that the index has moved above growth neutral. Over the past several months, the Creighton survey has registered the most consistent and strongest growth in farmland prices since the survey was launched in 2006.
Farm equipment sales: The May farm equipment-sales index declined to 66.9 from April’s 67.6. This was the 18th straight month that the index has advanced above growth neutral. Readings over the past several months are the strongest string of monthly readings recorded since the beginning of the survey in 2006.
Banking....
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