- For a 13th straight month, the Rural Mainstreet Index fell below growth neutral.
- Almost 4 of 5 bank CEOs indicated restructuring farm loans due to weak farm income.
- Farmland prices remained below growth neutral for the 34th consecutive month.
- Almost one-fifth of bankers reported increasing rejection rates on agricultural loans due to weak farm income.
OMAHA, Neb. – The Creighton University Rural Mainstreet Index sank for September and remained below growth neutral for the 13th straight month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Overall: The index, which ranges between 0 and 100 fell to 37.3 from 41.1 in August. This month’s reading is well off the index for September 2015 when it stood at 49.0.
“According to the USDA, 2016 net farm income is expected to decline by almost 12 percent from 2015 levels. Even with an anticipated 25 percent increase in government support payments for 2016, the Rural Mainstreet economy continues to falter according to our surveys of bankers,” said Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University's Heider College of Business.
“Even though loan defaults have changed little over the past year, downturns in farm income over the past three years are pushing bankers to change the terms of farm loans. According to Creighton’s September survey, almost four of five, or 79.1 percent, of bank CEOs reported a significant upturn in loan restructuring due to weak farm income,” said Goss.
Jim Eckert, president of Anchor State Bank in Anchor, Illinois, expects lower agriculture commodity prices to cause all but the best capitalized producers to only break even or lose money for 2016.