For a sixth straight month, the overall Rural Mainstreet Index (RMI) sank below growth neutral, according to the February survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
“Higher interest rates, weaker agriculture commodity prices and a credit squeeze are having a significant and negative impact on Rural Mainstreet businesses and on Rural Mainstreet farmers,” Ernie Goss of the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business, said in a news release.
Almost three-fourths of bank CEOs named low farm-commodity prices as the biggest risk for farms in 2024, the release said.
Approximately 44% of bankers indicated that the financial positions of farmers in their area had weakened over the past six months, according to the release.
The farm equipment sales index for February increased to a still weak 49.5 from January’s 47.9.
“This is the eighth time in the past nine months that the index has fallen below growth neutral,” Goss said. “Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment.”
Rural bankers remain pessimistic about economic growth for their area over the next six months, the release said. The February confidence index increased to 40.4 from January’s 38.5. Weak and falling agriculture commodity prices and higher interest rates over the past several months continued to constrain banker confidence.
