NICK GOSNELL
Hutch Post
HUTCHINSON, Kan. — The Creighton University Rural Mainstreet Index (RMI), that was released on Thursday, climbed above the growth neutral threshold, 50.0, for a second consecutive month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
Economist Ernie Goss said that the ag sector has actually done fairly well lately.
"There's some of course that are particularly affected by drought conditions," Goss said. "That would be particularly true in Kansas and Nebraska, where droughts have had significant impacts on the farm income, but overall, it's been good. We had much more elevated input prices six months to a year ago. Our prices have come down on those inputs. At the same time, what farmers are selling, of course, soybean and other commodities, those have held up pretty good, so the gap there has widened. That's contributing to better income for the farmers."
Farmers generally are doing pretty well cash wise, which is good news for them, but not necessarily for the bankers that the survey covers, but as conditions soften, Goss sees use of credit by farmers as more likely soon.
"That's going to probably turn upward in the weeks and months ahead, probably as input prices do increase a bit," Goss said. "Some of the agricultural commodity prices will likely come down somewhat. That will be prices of corn, soybeans and others. We are seeing an opening up of China, which is good, more of an opening up. That's a good market for agricultural commodities from this part of the country."
The expiring farm bill and how its renewal shakes out could mean a lot to rural main street by year's end.
"There are going to be some pressures on federal financial support for farming," Goss said. "We're going to see that. We asked the bankers about that threat. Sometime this summer, we're really going to see things come forth with deficit reduction and trying to extend the ability of the federal government to borrow more money."
The closer the debt ceiling fight gets to the farm bill deadline, the worse the opportunity may be for the rural areas.