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Rural Mainstreet Index Reaches Highest Level in Two Years
USAgNet - 02/20/2017

The Creighton University Rural Mainstreet Index remained weak with a reading below growth neutral for the 18th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The index, which ranges between 0 and 100 advanced to 45.8 from 42.8 in January. This is the highest overall index since September 2015.

"Weak farm commodity prices continue to squeeze Rural Mainstreet economies. However, the negatives are getting less negative. Over the past 12 months, livestock commodity prices have tumbled by 9.4 percent and grain commodity prices have slumped by 6.3 percent, both an improvement over last month," said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University'sHeider College of Business.

Only 14.9 percent of bankers reported that their local economy was expanding. Approximately 34 percent indicated their local economy was in a recession with the remaining 51.1 percent indicating little or no economic growth.

According to Todd Douglas, CEO of the First National Bank in Pierre, South Dakota, "What we see in the agriculture industry is that farmers hurt the worst are those who farm small grain crops exclusively." Douglas indicated operators that diversify in cattle, cattle feeding, hogs and other like type lines, are maintaining, or at least not experiencing as large a drop in net worth.

Farming and ranching: The farmland and ranchland-price index for February dipped to a frail 33.7 from January's 33.8. This is the 39th straight month the index has languished below growth neutral 50.0.

Bankers indicated that farmland prices in their area had declined by an average of 5.1 percent across the region over the past 12 months.

But there was a great deal of variation across the region. Pete Haddeland, CEO First National Bank in Mahnomen, Minnesota, for example, reported, "Land values are holding up here. We did not see the big prices increases." He also indicated that farmers harvested great crops last year.

The February farm equipment-sales index increased to 20.5 from 16.7 in January.

Almost three-fourths of the bankers expect agriculture equipment sales to continue to decline over the next 12 months. Only 4.3 percent expect agriculture equipment sales to increase over the same period of time.

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