July Survey Results at a Glance:

• For an 11th straight month, the Rural Mainstreet Index fell below growth neutral.
• Farmland prices remained below growth neutral for the 32nd straight month.
• Bank CEOs reported a 6 percent decline in farmland prices over the past year.
• Bankers expect cash expenses will exceed cash revenues for one in five crop farmers in the region.
• Bank CEOs expect farm loan defaults to grow by 5.4 percent over the next year.

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​OMAHA, Neb. – The Creighton University Rural Mainstreet Index for July fell from June’s weak reading, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
 
Overall: After improving for four of the last five months, the index, which ranges between 0 and 100, sank to 39.8 from 43.9 in June.
 
This is the 11th straight month the overall index has remained below growth neutral.
 
“Over the past 12 months, farm prices have fallen by 9 percent, and livestock prices are off by 16 percent. These weak agriculture commodity prices are pushing the overall Rural Mainstreet economy lower,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
 
As a result of weaker farm economic conditions, bankers expect almost one in five crop farmers, or 19.5 percent, to suffer negative cash flows where cash expenses exceed cash revenues for 2016.
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June Survey Results at a Glance:

• For a tenth straight month, the Rural Mainstreet Index remained below growth neutral.
• Farmland prices remained below growth neutral for the 31st straight month.
• Due to the weak agriculture economy, 73.5 percent of bankers increased collateral requirements, half boosted interest rates, and 35.3 percent rejected a higher percentage of farm loans.
• Rural Mainstreet businesses boosted hiring for the month.

OMAHA, Neb. – The Creighton University Rural Mainstreet Index for June increased from May’s very weak reading, though it remained below 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 index, which ranges between 0 and 100, rose to 43.9 from May’s 40.9. While remaining very fragile, the Rural Mainstreet Index (RMI) has increased four of the last five months.
 
“This is the 10th straight month the overall index has remained below growth neutral. Even though agriculture and energy commodity prices have increased recently, they remain well below last year’s prices and from their peak levels in 2011. Over the past 12 months, farm prices are down by 9.5 percent, grain prices are off by 4 percent, and livestock are down by 15 percent,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
 
Due to reductions in farm income and agriculture commodity prices over the past three years, bankers have altered their farm lending practices. Almost three of four, or 73.5 percent increased collateral requirements, half boosted interest rates, more than one-third, or 35.3 percent rejected a higher percentage of farm loans. Approximately, 17.6 percent of the bankers reported that their banks reduced the average size of farm loans.
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Iowa's elected officials and challenging candidates responded to questions about the Farm Credit System (FCS) at CBI's 4th State Fair Conference, a gathering of Iowa's community bankers and Iowa's leadership held yesterday in Altoona. The 80 banks in the Farm Credit System do not have to pay taxes on mortgage loan interest and other banks are lobbying congress to end that tax break. Supporters of the system say it’s a crucial source of financing for all of rural America, not just farmers.

Republican Senator Chuck Grassley says he supports the FCS, but it has operated outside its charter. “They came to my office to talk to me and I brought up some of the loans that were very questionable loans,” Grassley says. “I got the feeling that they were very embarassed by the issues that I brought up with them.”

Former Iowa Ag Secretary Patty Judge is the Democrat who’s challenging Grassley this year. “There are probably reforms that need to be made and I would suggest to you that we are going to have a real opportunity to do that next year as we write the new Farm Bill,” Judge says.

Republican Congressman Steve King of Kiron says the FCS needs to refocus on helping farmers and agribusinesses stay afloat. “They write their own mission statement,” King says. “I asked the chair of the board that before an Ag Committee hearing some time back and, you know, my message to that was: ‘We may have to help you write that mission statement.'”

Kim Weaver, a social worker from Sheldon, is the Democrat who’s challenging King. Weaver says she’s troubled by the FCSs loan to Cracker Barrel. “Even though it has a rather rustic appeal, it isn’t exactly a farm-related business,” Weaver says. “I would look at actually having a little bit more monitoring of that because I really don’t think it’s fair.”
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