Kansas Ag Connection - 8 of 10 Bankers Report Farmers in Solid Cash Position

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8 of 10 Bankers Report Farmers in Solid Cash Position
Kansas Ag Connection - 10/22/2021

For the 11th straight month, the Creighton University Rural Mainstreet Index (RMI) remained above 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 region's overall reading for October rose to 66.1 from September's healthy 62.5. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

"Solid grain prices, the Federal Reserve's record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. USDA data show that 2021 year-to-date agriculture exports are more than 25.4% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy," said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.

Farming and ranching: The region's farmland price index slid to a very strong 81.5 from September's record high 85.2. October's reading represented the 14th straight month that the index has moved above growth neutral.

The October farm equipment-sales index slipped to a strong 64.8 from 66.0 in September. Readings over the last several months represent the strongest consistent growth since 2012.

Bank CEOs indicated that congestion at domestic transportation hubs represented the greatest supply chain disruption for farmers.

Banking: The October loan volume index fell to 53.6 from September's 58.9. The checking-deposit index advanced to 66.1 from September's 58.8, while the index for certificates of deposit, and other savings instruments slumped to 32.1 from a weak 37.5 in September.

More than eight of 10, or 82.1%, of bankers indicated farmers in their area were in solid cash position with little need for borrowing. The remaining 17.9% of bankers reported farmer cash positions little changed from past years.

However, Steve Simon, CEO of South Story Bank in Slater-Huxley, Iowa said, "Year-end borrowing as farmers look to pre-pay rising input costs."

Hiring: The new hiring index improved to a very strong 71.4 from 67.9 in September. Despite solid economic growth, regional nonfarm employment levels remain below pre-covid levels. Labor shortages continue to be a significant issue for Rural Mainstreet businesses.

Confidence: The confidence index, which reflects bank CEO expectations for the economy six months out sank for the fourth straight month to 51.8, its lowest level since November of last year, and down from September's much stronger 65.4.

Home and retail sales: The home-sales index rose to 73.2 from September's 71.4. The retail-sales index for October declined to 55.4 from 58.9 in September. "Healthy farm prices and federal stimulus spending are having very positive impacts on Rural Mainstreet retail sales and home sales," said Goss.

The survey represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation. The Rural Mainstreet Index (RMI) is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current 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 in 2005 and launched in January 2006.

Below are the state reports:

Colorado: Colorado's Rural Mainstreet Index (RMI) for October declined to 65.7 from September's 68.7. The farmland and ranchland-price index fell to 82.0 from 88.3 in September. Colorado's hiring index for October expanded to 70.3 from 69.8 in September. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Colorado's Rural Mainstreet has lost 15,700, or 4.6% of its nonfarm employment (non-seasonally adjusted).

Illinois: The October RMI for Illinois dipped to 68.6 from 68.9 in September. The farmland-price index fell to 82.8 from 88.2 in September. The state's new-hiring index climbed to 71.1 from September's 69.7. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Illinois' Rural Mainstreet has lost 16,400, or 1.2% of its nonfarm employment (non-seasonally adjusted). Jim Eckert, president of Anchor State Bank in Anchor, reported that, "Grain harvest was well underway until recent rains. Corn yields are down a bit from 2020 and soybean yields are about the same."

Iowa: The October RMI for Iowa improved slightly to 65.4 from 65.3 in September. Iowa's farmland-price index dropped to 81.9 from September's 87.1. Iowa's new-hiring index for October expanded to 70.2 from 68.6 in September. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Iowa's Rural Mainstreet has lost 8,000, or 1.2% of its nonfarm employment (non-seasonally adjusted).

Kansas: The Kansas RMI for October advanced to 59.0 from 55.5 in September. The state's farmland-price index sank to 80.1 from September's 84.5. The new-hiring index for Kansas expanded to 68.4 from 66.0 in September. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Kansas' Rural Mainstreet has lost 9,700, or 2.3% of its nonfarm employment (non-seasonally adjusted).

Minnesota: The October RMI for Minnesota rose to 73.6 from 71.0 in September. Minnesota's farmland-price index dropped to 83.7 from September's 89.0. The new-hiring index for October climbed to 72.0 from 70.5 in September. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Minnesota's Rural Mainstreet has lost 14,800, or 3.0% of its nonfarm employment (non-seasonally adjusted).

Missouri: The October RMI for Missouri increased to 48.2, a regional low from September's 47.3, also a regional low. The farmland-price index declined to 77.0 from September's 81.1. The state's hiring gauge climbed to 65.3 from September's 62.6. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Missouri's Rural Mainstreet has lost 2,200, or 0.7% of its nonfarm employment (non-seasonally adjusted).

Nebraska: The Nebraska RMI for October rose to 66.8 from September's 65.3. The state's farmland-price index climbed to 87.3 from last month's 86.2. Nebraska's new-hiring index improved to 70.6 from 67.7 in September. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Nebraska's Rural Mainstreet has lost 11,700, or 4.2% of its nonfarm employment (non-seasonally adjusted).

North Dakota: The North Dakota RMI for October climbed to 59.1 from September's 57.6. The state's farmland-price index dropped to 80.1 from 83.8 in September. The state's new-hiring index advanced to 68.4 from September's 65.4. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, North Dakota's Rural Mainstreet has lost 7,400, or 4.6% of its nonfarm employment (non-seasonally adjusted).

South Dakota: The October RMI for South Dakota expanded to 66.3 from 65.0 in September. The state's farmland-price index decreased to 82.2 from 87.0 in September. South Dakota's October hiring index climbed to 70.5 from 68.5 in September. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, South Dakota's Rural Mainstreet has gained 2,200, or 1.1% of its nonfarm employment (non-seasonally adjusted).

Wyoming: The October RMI for Wyoming sank to 60.7 from September's 62.1. The October farmland and ranchland-price fell to 80.6 from 84.7 in September. Wyoming's new-hiring index climbed to 68.9 from September's 66.3. U.S. Bureau of Labor Statistics data indicate that compared to its pre-covid-19 level, Wyoming's Rural Mainstreet has lost 5,600, or 2.9% of its nonfarm employment (non-seasonally adjusted).

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