Rural Mainstreet: Farm Loans Hit Record High

The most recent Creighton University Rural Mainstreet Index slipped to 44.6 from 45.3. The last time the overall index was at or above growth neutral was August 2015.

“The U.S. Department of Agriculture is estimating 2017 will mark the fourth consecutive year that farm income has declined,” said Ernie Goss, chair in regional economics at Creighton University. “This downward trend has pushed our survey results into negative territory.”

The April farm equipment-sales index dipped to 21.5 from 22.0. This marks the 44th consecutive month the reading has fallen below growth neutral, which is 50.

Bankers reported that borrowing soared among farmers. The loan volume index hit a record 81.6 from last month’s 58.4. The checking-deposit index slumped to 52.2 from 56 while the index for certificates of deposit and other savings instruments declined to 44.5 from 47.6.

Jim Eckert, a bank president from Anchor, Ill., said in his survey response: “We feel that all our farmers have sufficient equity and determination to survive the current downturn in the farm economy.”

Findings from the April survey suggest that banks are more willing to lend this year than they were last. The rate of rejection has fallen from 35.3 percent in 2016 to 30.6 percent this year. Almost a third of bank CEOs reported no change in lending stemming from weak farm income.

The confidence index, which reflects expectations for the economy six months from now, slipped to 45.6 from 47.5.

“Until agricultural commodity prices begin to trend higher,” Goss said, “I expect bankers’ economic outlook to remain weak.”

Each month, community bank presidents and CEOs in nonurban agriculturally and energy-dependent portions of a 10-state region are surveyed regarding current economic conditions in their communities and their projected economic outlooks. Participants are from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming. S