Rural Mainstreet Economy Contracts Again

January 2025 Survey Results at-a-Glance:
-The overall Rural Mainstreet index fell below growth neutral for the 16th time in the past 17 months. 
-For the eighth time in the past nine months, farmland prices sank.
-On average, bank CEOs expect annual cash rents of $278 per acre of non-irrigated, non-pasture farmland.  
-Farm equipment sales dropped for the 18th straight month.
-On average, bankers expect approximately one in five grain farmers to experience negative cash flow for 2025.
-Approximately one-third of bank CEOs recommend that the Federal Reserve leave short-term interest rates unchanged in 2025. 
-According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for the first 11 months of 2024 rose by $673.4 million to $11.6 billion from the same period in 2023 for a 6.2% gain. 
-Mexico was the top destination for 2024 regional ag exports, accounting for 48.1% of total regional agriculture and livestock exports.
 

OMAHA, Neb. (Jan. 16, 2025) — For the 16th time in the past 17 months, the overall Rural Mainstreet Index (RMI) sank below the 50.0 reading in January, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Overall: The region’s overall reading for January increased to a weak 42.3 from December’s 39.6. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

Jeff Bonnett, CEO of Havana National Bank in Havana, Illinois, said, “At these extremely low (grain) prices, all field corn and soybean producing farmers cannot cover their input costs (we have 1975 prices but 2025 input costs). That is a reality based upon what our ag lenders that also farm tell me.”

On average, bankers expect approximately one in five grain farmers to experience negative cash flow for 2025.

“Despite another one-year extension of the farm bill, and $20.8 billion in farm disaster relief, the farm (grain) economic outlook remained weak for the first half of 2025. However, grain prices have recently improved, but not enough for profitability for many producers. On the other hand, regional livestock producers continue to experience solid prices, thus maintaining profitability,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Other comments from bankers in January:
Jeff Bonnett, CEO of Havana National Bank, expects more than 29% of grain farmers in his area to experience negative cash flow for 2025.
Jim Eckert, CEO of Anchor State Bank in Anchor, Illinois, said, “Low grain prices and stable-to-increasing input prices lead us to expect continued farm losses for all but our very substantial area farmers.”
Terry Engelken, Vice President of Washington State Bank in Washington, Iowa, said, “Most of our cash rents are from $275 to $350.”
 

Farming and ranch land prices: For the 8th time in the past nine months, farmland prices sank below growth neutral. The region’s farmland price index rose slightly to 42.0 from 41.3 in December. “Elevated interest rates and higher input costs, along with below breakeven grain prices for some farmers in the region, have put downward pressure on ag land prices,” said Goss.

This month, bank CEOs were asked to project 2025 farmland rental rates for non-irrigated, non-pasture farmland. On average, bankers expect an annual rental rate per acre of $278.

According to trade data from the International Trade Association (ITA), regional exports of agriculture goods and livestock for the first 11 months of 2024 rose by $673.4 million to $11.6 billion from the same period in 2023 for a 6.2% gain. Mexico was the top destination for 2024 ag exports, accounting for 48.1% of total regional agriculture and livestock exports.

Farm equipment sales: The farm equipment sales index rose to a very weak 17.4 from December’s 14.3, which was the lowest reading since October 2016. “This is the 18th straight month that the index has fallen below growth neutral. High input prices, tighter credit conditions and weak farm grain prices are having a negative impact on the purchases of farm equipment,” said Goss.

Banking: The January loan volume index dropped to 60.0 from December’s 69.6. The checking deposit index inched upward to 48.0 from 47.8 in December. The index for certificates of deposits (CDs) and other savings instruments climbed to 58.0 from 50.1 in December. Federal Reserve interest rate policies have boosted CD purchases above growth neutral for 26 straight months.

Approximately one-third of bank CEOs recommend that the Federal Reserve leave short-term interest rates unchanged in 2025. 

Hiring: The new hiring index for January increased to 47.9 from December’s 45.7.

Confidence: Rural bankers remain pessimistic about economic growth for their area over the next six months. The January confidence index rose to 42.3 from December’s 37.5. “Improving, but still weak agriculture commodity prices and negative farm cash flows, combined with downturns in farm equipment sales over the past several months, continued to push banker confidence below growth neutral,” said Goss.

Home and retail sales: Home sales softened from an already weak reading of 43.5 in December to 40.0 in January. Regional retail sales deteriorated for January with a reading of 44.0, which was down from December’s stronger 52.1.

The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index is a unique index that covers 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. The index provides the most current real-time analysis of the rural economy. Goss and the late Bill McQuillan, former Chairman of the Independent Community Banks of America, created the monthly economic survey and launched it in January 2006.

Below are the state reports:

Colorado: The state’s Rural Mainstreet Index (RMI) for January rose to 57.2 from 54.2 in December.  The farmland and ranchland price index for January declined to 53.2 from December’s 54.7. The state’s new hiring index expanded to 61.1 from December’s 54.1. According to trade data from the International Trade Association (ITA), Colorado exports of agriculture goods and livestock for the first 11 months of 2024 rose by $243.0 million from the same period in 2023 for a 145.1% gain.  Mexico was the number one destination for 2024 ag exports, accounting for 18.2% of total Colorado agriculture and livestock exports.

Illinois: The state’s January Rural Mainstreet Index (RMI) increased to 49.2 from 46.5 in December. The farmland price index increased slightly to 43.7 from December’s 42.9. The state’s new hiring index climbed to 50.1 from 43.1 in December. According to trade data from the ITA, Illinois exports of agriculture goods and livestock for the first 11 months of 2024 rose by $711.2 million from the same period in 2023 for a 17.6% gain. China was the top destination for 2024 Illinois ag exports, accounting for 30.9% of total state agriculture and livestock exports. 

Iowa: January’s RMI for the state slumped to 40.7 from 41.7 in December. Iowa’s farmland price index for January dipped to 41.3 from 41.5 in December. Iowa’s new hiring index for January increased to 46.2 from 45.5 in December. According to trade data from the ITA, Iowa exports of agriculture goods and livestock for the first 11 months of 2024 sank by $25.1 million from the same period in 2023 for a 1.6% reduction. Mexico was the number one destination for Iowa’s 2024 ag exports, accounting for 65.2% of total state agriculture and livestock exports.

Kansas: The Kansas RMI for January increased to 40.1 from December’s 37.4. The state’s farmland price index climbed to 41.1 from 37.4 in December. The new hiring index for Kansas rose to 46.2 from 44.0 in December. According to trade data from the ITA, Kansas exports of agriculture goods and livestock for the first 11 months of 2024 fell by $17.2 million from the same period in 2023 for a 1.4% reduction. Mexico was the number one destination for 2024 ag exports, accounting for 71.1% of total Kansas agriculture and livestock exports.

Minnesota: The January RMI for Minnesota fell to 52.5 from 53.2 in December. Minnesota’s farmland price index increased to 49.0 in January from 47.6 in December. The new hiring index for January climbed to 55.4 from 53.0 in December. According to trade data from the ITA, Minnesota exports of agriculture goods and livestock for the first 11 months of 2024 sank by $186.2 million from the same period in 2023 for a 16.4% reduction. Mexico was the number one destination for 2024 Minnesota ag exports, accounting for 40.0% of total state agriculture and livestock exports.

Missouri: The state’s January RMI climbed to 54.5 from December’s 50.6. The farmland price index for January rose to 61.0 from 59.5 last month. The state’s new hiring gauge for January advanced to 70.3 from 54.5 in December. According to trade data from the ITA, Missouri exports of agriculture goods and livestock for the first 11 months of 2024 sank by $245.9 million from the same period in 2023 for a 21.8% reduction. Mexico was the number one destination for 2024 Missouri ag exports, accounting for 83.1% of total Missouri agriculture and livestock exports.

Nebraska: The Nebraska Rural Mainstreet Index for January increased to 39.2 from December’s 36.5. The state’s farmland price index for January increased slightly to 40.9 from December’s 40.0. Nebraska’s new hiring index rose to 45.9 from December’s 43.7. According to trade data from the ITA, Nebraska exports of agriculture goods and livestock for the first 11 months of 2024 rose by $81.3 million from the same period in 2023 for a 10.3% gain. Mexico was the number one destination for 2024 Nebraska ag exports, accounting for 68.3% of total Nebraska agriculture and livestock exports.

North Dakota: North Dakota’s RMI for January climbed to 51.2 from December’s 47.4. The state’s farmland price index increased slightly to 44.3 from 43.1 in December. The state’s new hiring index rose to 50.1 from 47.5 in December. According to trade data from the ITA, North Dakota exports of agriculture goods and livestock for the first 11 months of 2024 rose by $112.8 million from the same period in 2023 for a 12.5% gain. Mexico was the number one destination for 2024 North Dakota ag exports, accounting for 46.8% of total North Dakota agriculture and livestock exports.

South Dakota: The January RMI for South Dakota rose to 42.0 from 39.3 in December. The state’s farmland price index dipped to 40.5 from 40.7 in December. South Dakota’s January new hiring index increased to 45.4 from December’s 44.6. According to trade data from the ITA, South Dakota exports of agriculture goods and livestock for the first 11 months of 2024 rose by $371.0 thousand from the same period in 2023 for a 0.3% gain. Mexico was the number one destination for 2024 South Dakota ag exports, accounting for 76.3% of total state agriculture and livestock exports.

Wyoming: The January RMI for Wyoming increased to 34.1 from 31.6 in December. The January farmland and ranchland price index increased to 39.4 from December’s 38.6. Wyoming’s new hiring index climbed to 44.1 from 41.9 in December. According to trade data from the ITA, Wyoming exports of agriculture goods and livestock for the first 11 months of 2024 fell by $1.0 million from the same period in 2023 for a 20.6% reduction. Canada was the number one destination for 2024 Wyoming ag exports, accounting for 61.3% of total state agriculture and livestock exports.