Farmland Prices Fall Below Growth Neutral for Second Consecutive Month in Rural Mainstreet Index

Aug 01, 2024

For the 10th consecutive month, the Rural Mainstreet Index (RMI) has fallen below the neutral growth threshold. This downturn is accompanied by a notable decline in farmland prices and a continued slump in farm equipment sales, as revealed by the latest survey results from Creighton University.

The RMI, a key measure of economic activity in nonurban, agriculturally and energy-dependent regions across 10 states, has remained under the growth neutral mark of 50.0. The index, which tracks conditions in approximately 200 rural communities, reflects ongoing economic stress or growth in these areas, according to Creighton.

The June 2024 survey revealed that farmland prices have fallen for the second month in a row after being above growth neutral for 53 consecutive months. The peak for farmland prices this year was in January, where it was at 64.0, indicating a significant downturn from earlier in the year.

Farm equipment sales also experienced a decline, dropping below growth neutral for the 12th time in the past 13 months. The last period of growth neutral or higher farm equipment sales was in July 2023. Since then, sales have struggled, with February marking the peak of farm equipment sales for this year at 49.5.

Delinquency rates for farm and business loans have remained relatively stable over the past six months, according to Creighton’s survey. However, there have been some changes in loan policies: 8.7% of bankers reported increasing farm loan rejection rates, while 13.0% and 4.3% adjusted their loan-to-value ratios by restructuring and reducing them, respectively.

Trade data from the International Trade Assn. reveals a 4.1% decline in regional exports of agricultural goods and livestock for 2024 year-to-date compared to the same period in 2023. This drop in exports adds another layer of difficulty for the rural economy, already strained by falling prices and sluggish equipment sales.

Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are the 10 states included in the data.

Source : Farm Equipment

Video: Western Canadian Agriculture: Hard Times Made the World's Best Farmers

Western Canadian agriculture produced the most advanced farmers in the world not through abundance but through adversity. The crow rate fell. The wheat price went nowhere. The brown envelopes stopped.

When the subsidies disappeared, the bad farmers left and the good ones stayed. And the ones who stayed could not just grow wheat anymore. They started growing lentils and canola and peas and flax and faba beans. They built crop rotation. They got serious about agronomy because there was no government backstop. That process produced the Western Canadian agriculture Dennis Bulani describes in this clip: the most advanced, most educated farming culture in the world.

His contrast with Iowa corn and soybean farmers is sharp. At a DeKalb farmer meeting in Okoboji, Iowa, he asked what crop rotation they ran. Beans on corn stubble, corn on bean stubble. How do you fertilize? The co-op agronomist handles it. Have you considered other crops? No need. We make so much money on corn and soybeans. Western Canadian agriculture was never allowed that comfort. And now those Iowa farmers are watching soybean markets lock up with China and corn prices slide, and they do not have the agronomy knowledge or the research base to pivot. Western Canadian farmers adapted on a dime because they had done it before.

Dennis also makes the case that Western Canadian agriculture keeps adapting in real time. Low commodity prices over the past year have pushed growers to look seriously at precision spot-spray technology. He knows a neighbor who bought a sprayer with the seeing-eye system and sprayed only 80 out of 320 acres. As a chemical retailer Dennis acknowledges that will affect his sales. He supports it anyway, because if it advances Canadian agriculture and makes farmers money, that is a good outcome.

The lesson Dennis draws from the tale of two farms: continuous improvement is the only durable strategy. When canola was $22 a bushel some growers went to Arizona instead of the Crop Production Show. When the price came down those same growers came back to the research and the discipline. Products do not go on Rack Petroleum's shelves unless they pass a replicated trial first. That is what Western Canadian agriculture built through hard times: farmers who do the work whether the times demand it or not.

Dennis Bulani is CEO of Rack Petroleum and Ultimate Yield in Biggar, Saskatchewan. Dan Aberhart hosts GTF Productions, Western Canadian Agriculture's foremost live briefing platform and its foremost AI training platform for ag operators