Rural Bankers: Farmland Prices Hit Highest Level Since 2012
April RMI 041921
Optimism is spouting in many areas of the rural economy. While the Rural Mainstreet Index (RMI) dipped from March’s record high of 71.9, economic growth is still occurring in rural America.
For April 2021, the index sits at 69, marking the sixth straight month the RMI has remained above growth neutral. The index ranges between 0 and 100, with 50 representing growth neutral.
Around 40% of bank CEOs reported their local economy expanded between March and April.
“Strong growth in grain prices, the Federal Reserve’s record-low interest rates and growing exports have underpinned the Rural Mainstreet Economy,” reports Ernie Goss, who chairs Creighton’s Heider College of Business and leads the RMI. “Even so, current rural economic activity remains below pre-pandemic levels.”
The highlight of the report is the farmland price index. For a seventh straight month, it has advanced above growth neutral. The April reading climbed to 78.6 — the highest level since 2012, and up from 71.9 in March. This is first time since 2013 that farmland price index has posted seven straight months of above-neutral growth.
The farmland price index rose in each state included in the RMI. Nebraska claims the highest farmland price index with 82.6. That’s up from last month’s 76.1.
Bankers reported 9% of farmland sales over past six months have gone to non-farmer investors.
The April farm equipment sales index rose to 67.5, its highest level since 2013. That’s up from March’s strong 63.5. After 86 straight months of readings below growth neutral, farm equipment sales bounced into growth territory for the last five months.
The confidence index, which reflects bank CEO expectations for the economy six months out, fell to a very healthy 72.4 from 76.7 in March.
“Federal stimulus checks, improving gain prices and advancing exports have supported confidence offsetting negatives from pandemic ravaged retail and leisure and hospitality companies in the rural economy,” Goss says.
This RMI, which started in 2005, represents an early snapshot of the economy of rural agricultural and energy-dependent portions of the nation. It focuses on 200 rural communities in a 10-state region with an average population of 1,300.
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