Always, always remember that the long term value of farmland is the cash flow it can kick off.
(unless, of course, you happen to be privy to material non-public information on zoning or development changes)
From Creighton University's Heider College of Business, August 15:
August 2024 Survey Results at a Glance:
• For a 12th straight month, the overall Rural Mainstreet Index sank below growth neutral, according to bank CEOs in the region.
• For the third time in the past four months, farmland prices sank.
• Farm equipment sales sank for the 13th straight month.
• Farm loan delinquency rates over the past six months climbed by an average of 1.1% across the region.
• According to trade data from the International Trade Association, regional exports of agriculture goods and livestock for 2024, year-to-date, were down by $78.9 million, or 1.3%, from the same period in 2023.Creighton University Rural Mainstreet Index (RMI)
OMAHA, Neb. (August 15, 2024) — For a 12th straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the August 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 August sank to 40.9 from 41.3 in July. It was the lowest reading since November of last year. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.
“Weak agriculture commodity prices, sinking agriculture equipment sales and declining farm exports pushed the overall reading below growth neutral for the 12th straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Jim Eckert, CEO of Anchor State Bank in Anchor, Ill. said, “The sad part is that most of our farmers will lose money or just break even due to poor commodity prices.”
Other comments from bankers for August:
• Terry Engelken, Vice President of Washington State Bank in Washington, Iowa, reported that, “Turkey producers are feeling the pressure from lower prices.”
• Jeff Bonnett, CEO of Havana National Bank in Havana, Ill. said, “Although year-over-year inflation is moving the right direction, the overall increase to inflation since pre-COVID days is taking a toll on rural America. I saw a study that the same items from a pre-COVID grocery receipt purchased here in 2024 went from $125 to over $400 now. By the time working folks in our area pay their utilities, groceries and fill the tank up as needed each month, there is little disposable income left for dining out, entertainment, and small business and crafts shopping.”
• Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, reported that, “Interesting how the federal debt now exceeds $35 trillion and neither presidential candidate or political party has proposed a plan to solve the problem. Very disappointing and alarming.”This month, bankers were asked to compare the current business environment in their area to that prior to Covid-19. Approximately 22.8% reported business conditions were worse while 18.2% indicated business conditions were improved compared to pre-Covid. The remaining 59.0% indicated conditions had barely changed....
....MUCH MORE
The Great Depression of the 1930's began in Farm Country in the 1920's.
Jus' sayin'.
Long time readers may remember the former Governor of the Reserve Bank of India "Raghuram Rajan on The Boom and Bust in Farm Land Prices in the United States in the 1920s"