- For a 15th straight month, the Rural Mainstreet Index fell below growth neutral.
- Farmland prices decline for 36th straight month.
- More than seven of 10 bank CEOs indicated that their bank had increased collateral requirements as a result of declining farm income.
- More than one of four bank CEOS indicated that their bank has made no lending changes due to falling farm income.
- More than one-fifth of livestock producers are expected to report negative cash flow for 2016 (cash expenses above cash revenues).
- States trending higher: Iowa and South Dakota; States trending lower: Colorado, Kansas, Illinois, Missouri, North Dakota and Wyoming; States treading water: Minnesota, Nebraska.
OMAHA, Neb. (Nov. 17, 2016) – The Creighton University Rural Mainstreet Index remained weak with a reading again below growth neutral for the 15th 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 index, which ranges between 0 and 100 rose to 36.6 from October’s 31.8.
“Farm commodity prices continue to slam Rural Mainstreet economies. Over the past 12 months, livestock commodity prices have tumbled by 27.2 percent and grain commodity prices have slumped by 16.6 percent. The economic fallout from this price weakness continues to push growth into negative territory for seven of 10 states in the region,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
On average, bankers expect one of five livestock producers, or 20.7 percent, to experience 2016 cash expenses greater than cash revenues. “This is approximately the share of grain farmers with expected negative cash flows for the year,” said Goss.
States trending higher: Iowa and South Dakota; States trending lower: Colorado, Kansas, Illinois, Missouri, North Dakota and Wyoming; States treading water: Minnesota, Nebraska.
On a more positive note, Michael Flahaven, president of Wenona State Bank in Wenona, Ill., said, “A generous government payment this fall helped keep some farmers' cash flow on the positive side.”