Trouble on the Farm
Dr. Ernie Goss of Creighton University is the country’s foremost expert on the Midwest economy, and a frequent guest on KXEL. His monthly Rural Mainstreet Index survey was just released, and it’s not great news for rural areas.
This is a survey of bank CEOs in rural areas of a 10-state region, including Iowa, dependent on agriculture and/or energy.
While the overall Rural Mainstreet Index was above growth neutral for only the second time in the past six months…the distinct farm and ranchland index fell below growth neutral for the first time since April of this year.
Here’s a headline that could spell trouble… As a result of weak farm equipment sales, bankers reported that borrowing to support farm equipment purchases accounted for only 5.3% of agriculture lending while real estate loans represented 52.6% of ag lending.
And the bank CEOs rated approximately 52.5% of farm borrowers in good condition. That’s barely a majority. Not surprisingly, a large number of those same bankers say farm income will decline in the next 12 months…47.5% of bankers hold that view.
Exports are improving, however…in Iowa, in particular. According to trade data included in Dr. Goss’ report, Iowa exports of agricultural goods and livestock for the first half of this year were up by 6.2% compared with the same period last year. The biggest market increase was to Japan, a whopping 24.5% gain in exports from Iowa from last year to this.
As the celebration of the county fairs and state fairs comes to a close, the hard work of harvest is ahead…and the hard work of penciling out the balance sheet seems even harder these days.
