Economic Rebound in Farm Sector Still on Hold
For the third straight month, a rural economic indicator has declined. This suggests that a rural economic rebound is still several months away. Creigthon University (located in Omaha) performs a monthly survey of bank CEO’s in an 11-state region which primarily comprises the corn belt region and related states.
The Rural Mainstreet Index (RMI) which ranges between 0 and 100, slipped to a weak 32.00 from 32.6 in July and 34.0 in June. However, the reading is still higher than the all-time low of 16.9 in February of this year. A reading of 50 indicates neutral growth.
Creighton University economist Ernie Goss stated “The RMI has remained below growth neutral for 18 consecutive months. After appearing to bottom out earlier this year, the index, which gauges overall economic activity, appears to be moving sideways or with little change.”
The weak national economy appears to be negatively affecting the farm economy. With farm income under pressure, land prices and sales of farm equipment have weakened over the past several months. Bankers were asked their perceptions on this years crop yields and about 60% indicate that the crop will be up substantially over last year’s crop.
As a result of softer farm income, the farmland-price index has moved below the 50 mark for the 10th straight month. The farm-equipment-sales index is also below the 50 mark for the 11th straight.
Hiring in rural areas also remains weak. Over the last 12 months, the region has lost 5 percent of their jobs according to Goss.
The states covered by the index are Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. The survey represents an early snapshot of the rural and agricultural dependent regions. It focus on approximately 200 rural communities and seems to give the most current real-time analysis of the ag economy.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
Economic rebound is not far away. The government should focus on addressing these problem in the economy.