Low Grain Prices Continue To Hamper Rural Economy

 

The rural economy fell below growth neutral for the first time in four months as exports slowed and grain prices remained low. According to bankers in rural communities, farmland prices are still declining, albeit at a stabilized rate. Nearly one fifth of farmland sales are still being purchased with cash, similar to last fall.

 

The Creighton University Rural Mainstreet Index (RMI), an index which ranges from 0 to 100 with 50.0 representing growth neutral, decreased in the February report to 46.4 from 50.9 in January. Ernie Goss, Ph.D, Economics Professor at Creighton University stated, “Weaker exports and lower energy and grain prices continue to weigh on the rural economy that is dependent on agriculture and energy.”

 

 

The farmland price index was unchanged at 39.4 and remains at its highest level since August 2014. “Even though crop prices have stabilized, demand for farmland remains weak pulling agricultural land prices down by an estimated annualized rate of 6% to 8%. This is the 15th straight month the index has moved below growth neutral,” said Goss. A large amount of farmland continues to be bought with cash, 22.2%. This is in comparison to 23.3% in October of 2014.

 

 

The farm equipment sales index decreased to 19.5 from 29.5 in January. “Farmers have become very cautious regarding equipment buying even though their purchases of seeds and other inputs have remained solid,” said Goss.