Rural Mainstreet Economy Faces Continued Downturn

For the 16th time in the past 17 months, the overall Rural Mainstreet Index (RMI) sank below the 50.0 reading in January, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

“Despite another one-year extension of the farm bill, and $20.8 billion in farm disaster relief, the farm (grain) economic outlook remained weak for the first half of 2025. However, grain prices have recently improved, but not enough for profitability for many producers. On the other hand, regional livestock producers continue to experience solid prices, thus maintaining profitability,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University.

“Despite another one-year extension of the farm bill, and $20.8 billion in farm disaster relief, the farm (grain) economic outlook remained weak for the first half of 2025. However, grain prices have recently improved, but not enough for profitability for many producers. On the other hand, regional livestock producers continue to experience solid prices, thus maintaining profitability,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University.

Farm equipment sales: The farm equipment sales index rose to a very weak 17.4 from December’s 14.3, which was the lowest reading since October 2016. “This is the 18th straight month that the index has fallen below growth neutral. High input prices, tighter credit conditions and weak farm grain prices are having a negative impact on the purchases of farm equipment,” said Goss.

Farming and ranching land prices: For the 8th time in the past nine months, farmland prices sank below growth neutral. The region’s farmland price index rose slightly to 42.0 from 41.3 in December. “Elevated interest rates and higher input costs, along with below breakeven grain prices for some farmers in the region, have put downward pressure on ag land prices,” said Goss.

According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for the first 11 months of 2024 rose by $673.4 million to $11.6 billion from the same period in 2023 for a 6.2% gain. Mexico was the top destination for 2024 ag exports, accounting for 48.1% of total regional agriculture and livestock exports.

Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The January confidence index rose to 42.3 from December’s 37.5. “Improving, but still weak agriculture commodity prices and negative farm cash flows, combined with downturns in farm equipment sales over the past several months, continued to push banker confidence below growth neutral,” said Goss.

Source: Creighton.edu