For the eighth consecutive month, the overall Rural Mainstreet Index (RMI) fell below growth neutrality, according to the April survey of bank bosses in rural areas of a 10-state region that relies on agriculture and/or energy.
In total: The region's overall score for April rose to 45.8 from 38.0 in March, its lowest level since June 2020. The index ranges from 0 to 100, with a value of 50.0 being growth neutral.
“Higher interest rates, weaker agricultural commodity prices and higher grain storage costs resulted in the overall reading below growth neutral for the eighth straight month,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Heider College of Business from Creighton University.
Land prices for agriculture and livestock: The region's agricultural land price index rose to a solid 56.5 from 56.0 in March. The agricultural land price index remained above the growth-neutral level for 53 consecutive months. “The Creighton survey continues to point to solid but slowing growth in farmland prices in 2024. About 17.4% of bankers said farmland prices increased from March levels,” Goss said.
“Even given weaker farm conditions, only about 0.9% of bankers reported an increase in farm loan defaults over the past six months. This is down slightly from 1.0% last month when the same question was asked,” Goss said.
About half of bank CEOs said ethanol production was very important to the local economy.
Terry Engelken, former president of the Washington State Bank in Washington, Iowa, reported: “We have a biodiesel plant and it doesn't require a pipeline (to transport CO2). There is a new technology that converts the CO2 into methanol, which would eliminate the need for pipelines.”
Regional exports of agricultural goods and livestock for 2024 were year-to-date, according to trade data from the International Trade Association down 7.2% compared to the same period in 2023.
Sales of agricultural machinery: The farm equipment sales index improved to a weak 47.7 in April from 30.4 in March, the lowest reading since May 2020. “This is the 10th time in the last 11 months that the index has fallen below the growth neutral level.” Higher borrowing costs, tighter credit conditions and weaker grain prices are negatively impacting farm equipment purchases,” Goss said.
Banking: The loan volume index rose to a strong record high of 85.4 in April from 79.2 in March. The current deposit index fell to 52.2 from 62.5 in March. The index for certificates of deposit and other savings instruments slipped to a still-strong 71.7 from 72.9 in March.
Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, reported: “A hot topic recently has been the current administration's proposed plans to continue to forgive $30 million in student loan debt.” In purely business terms: Has “Haven’t the Supreme Court commented on this earlier and decided that these loans cannot be granted arbitrarily under contract law?”
James Brown, CEO of Hardin County State Bank in Eldora, Iowa, said: “Farm credit lines will increase this year due to the loss of working capital in most 2023 financial reports. There is still a reasonable amount of working capital available, as most balance sheets show, but cash flows are at breakeven levels at current prices and a normal crop year.”
Attitude: The April hiring index rose to 56.8 from 52.2 in March. “Approximately 13.6% of bankers reported an increase in hiring compared to March,” Goss said. Data from the U.S. Bureau of Labor Statistics suggests the regional rural Main Street economy grew jobs by 2.6% over the past 12 months, compared to 0.9% in urban areas in the same states.
Trust: Land bankers remain very pessimistic about their region's economic growth over the next six months. The confidence index rose to 37.5 in April from 36.0 in March. “Weak and falling agricultural commodity prices, agricultural exports and higher interest rates in recent months have continued to dent banker confidence,” Goss said.
Home and Retail Sales: Both home sales and retail sales fell below growth neutrality over the past six months. The home sales index fell to a very weak 34.8 in April from 41.7 in March. “Elevated mortgage rates and a limited supply of homes are driving the home sales index in rural areas below growth neutrality,” Goss said.
The retail sales index rose slightly to 41.3 in April from 39.6 in March. “High consumer debt, increased interest rates and weaker farm incomes are depressing retail sales in the rural main street economy,” Goss said.
The survey provides an early snapshot of the economy of rural, agricultural and energy-dependent parts of the country. The Rural Mainstreet Index is a first-of-its-kind index that covers 10 regional states and focuses on approximately 200 rural communities with an average population of 1,300 residents. The index provides the most up-to-date, real-time analysis of the rural economy. Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.
Below you will find the state reports:
Colorado: The state's RMI improved to 74.2 in April from 68.3 in March. The farmland and ranchland price index rose to 63.4 in April from 62.9 in March. The state's new hiring index rose to 65.2 from 61.0 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 high 99.5% from the same period in 2023.
Illinois: The state's RMI rose to 38.0 in April from 30.7 in March. The agricultural land price index rose slightly to 53.1 from 52.3 in March. The state's new hiring index rose to 52.6 from 47.9 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 down 20.7% compared to the same period in 2023.
Iowa: The RMI for the state increased from 34.5 to 36.7 in April. Iowa's agricultural land price index improved to 52.1 in April from 51.4 in March. Iowa's new hiring index rose to 52.1 in April from 46.8 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 high 16.8% compared to the same period in 2023.
Kansas: The Kansas RMI rose to 36.0 in April from 30.2 in March. The state's agricultural land price index rose to 52.6 from 52.1 in March. Kansas' new hiring index rose to 51.9 from 47.7 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 high 6.7% compared to the same period in 2023.
Minnesota: The RMI for Minnesota rose to 48.1 in April from 42.2 in March. Minnesota's farmland price index fell to 54.2 from 55.5 in March. The April hiring index improved to 54.2 from 51.9 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 down 29.5% compared to the same period in 2023.
Missouri: The state's RMI rose to 75.8 in April from 51.7 in March. The agricultural land price index rose to 63.9 from 58.2 in March. The state's new hiring indicator rose to 65.8 from 55.2 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 down 13.4% compared to the same period in 2023.
Nscratch: The Nebraska RMI for April rose to 42.7 from 38.0 in March. The state's agricultural land price index rose to 54.5 in April from 54.3 in March. Nebraska's new hiring index rose to 54.2 in April from 50.4 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 high 27.3% compared to the same period in 2023.
North Dakota: North Dakota's RMI rose to 42.3 in April from 38.9 in March. The state's agricultural land price index fell to 54.1 from 54.6 in March. The state's new hiring index rose to 54.1 from 50.7 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 high 3.0% compared to the same period in 2023.
South Dakota: The RMI for South Dakota rose to 49.6 in April from 43.0 in March. The state's agricultural land price index rose to 56.5 from 55.7 in March. South Dakota's new hiring index rose to 56.6 in April from 52.2 in March. According to trade data from the International Trade Association, exports of agricultural goods and livestock for the current year amounted to 2024 down 4.3% compared to the same period in 2023.
Wyoming: The RMI for Wyoming rose to 41.3 in April from 38.9 in March. The farmland and ranchland price index fell to 54.1 in April from 64.5 in March. Wyoming's new hiring index improved to 53.7 from 50.6 in March. Exports of agricultural goods and livestock remained unchanged in the current year 2024 compared to the same period in 2023, according to trade data from the International Trade Association.
Tables 1 and 2 summarize the survey results. Next month's survey results will be released on the third Thursday of the month, May 16, 2024.
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Table 1: Rural high street economy in the last two months and one year ago: (Index > 50 indicates expansion) |
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| April 2023 | March 2024 | April 2024 | |
| Regional economic index | 50.1 | 38.0 | 45.8 |
| Loan volume | 62.5 | 79.2 | 85.4 |
| Check deposits | 25.0 | 62.5 | 52.2 |
| Certificates of deposit and savings instruments | 74.0 | 72.9 | 71.7 |
| Farmland prices | 64.6 | 56.0 | 56.5 |
| Sales of agricultural machinery | 54.3 | 30.4 | 47.7 |
| Home sales | 44.0 | 41.7 | 34.8 |
| Attitude | 54.2 | 52.2 | 56.8 |
| retail store | 41.7 | 39.6 | 41.3 |
| Confidence index (regional economy in six months) | 38.0 | 36.0 | 37.5 |
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Table 2: The rural high street economy, April 2024 |
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| Percentage of reporting bankers | |||||
| No ethanol plant in the area | Not that important | Important | Very important | The most important industry | |
| How important are ethanol plants to your local economy: | 4.0% | 8.3% | 37.5% | 45.8% | 4.4% |
| Percentage of reporting bankers | |||||
| 0.0% – 0.9% | 1% – 4% | 5% – 10% | |||
| The default rates on agricultural loans in the last six months are: | 87.0% | 8.7% | 4.3% | ||
| Percentage of reporting bankers | |||||
| No opinion | Transport should be by train or truck | Yes, with appropriate landowner compensation | Absolutely not | ||
| As a banker, do you support transporting captured CO2 from ethanol plants via pipelines that traverse properties in your area? | 25.0% | 4.2% | 54.2% | 16.7% | |
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