Low farm commodity prices are a threat not only to farmers this year but also to rural community banks in the Midwest and Plains region, according to a monthly survey by Creighton University.
Almost three-fourths of rural bankers who responded to the Rural Mainstreet survey in February named low commodity prices as the biggest risk for farmers in 2024, and more than four in 10 listed crop prices as the biggest risk for community banks.
“Our farmers are not projecting very profitable operations in 2024,” said Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois. “Although some input costs are down from last year, weak grain prices for the 2024 crop are depressed and expected to remain so.”
Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, reported that “(Corn) prices that are $1.50 to $2.00 per bushel less than break-even are obviously not sustainable.”
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The Rural Mainstreet Index is based on a survey of rural bankers in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming — states dependent on agriculture and/or energy. It focuses on about 200 rural communities with an average population of 1,300 people.
The survey’s overall index for February fell to 46.2 from 48.1 in January, and was below growth-neutral for a sixth straight month. Any readings above 50 on the index that ranges from 0 to 100 suggests economic growth in the months ahead, with readings below 50 indicating decline.
“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,” Creighton economist Ernie Goss said.
The survey’s business confidence index, which looks six months ahead, rose to 40.4 from January’s 38.5 but remained below growth-neutral.
North Dakota’s index for February dipped to 63.5 from 64.3 in January. The state’s farmland price index declined to 61.4 from 67.0 the previous month. The state’s new hiring index expanded to 54.4 from January’s 54.2.
Exports of North Dakota agriculture goods and livestock for 2023 were $986 million, which was up 10.7% from $891 million in 2022, according to data from the International Trade Association.
The full Rural Mainstreet report can be found at http://www.creighton.edu/economicoutlook/mainstreeteconomy.
