Rural economy continues to decline, farmland prices rise
The Rural Mainstreet economy declined for the third straight month according to the August survey of Creighton University’s Rural Mainstreet Index. The Rural Mainstreet Index declined slightly to 32.0 from 32.6 in July, but well above the February record low of 16.9 (a reading of 50.0 is considered growth neutral). The confidence index increased slightly to 46.0 from 44.6 in July, despite positive economic news over the last few months.
Creighton University economist Ernie Goss said, "The RMI has remained below growth neutral for 18 consecutive months. After appearing to bottom out earlier in the year, the index, which gauges overall economic activity, appears to be moving sideways or with little change."
In the August survey, bankers were asked about their expectations for 2009 crop yields. 60% responded that crop yields would be up significantly from last year, while only 8% expect yields to decline from 2008 levels. Despite increased yields, bankers still expect 2009 farm income to be below 2008 due to weak grain prices.
Bradley Robson, CEO of First State Bank in Belmond, Iowa, said "We have missed the bad weather to date, the hail and wind. Crops look excellent and should be 20 percent above last year’s yields. But, with crop prices down, look for 2009 farm income to be off 2008 levels significantly."
Farmland prices
Despite the expectation of lower farm income, the farmland-price index rose slightly in August to 43.7 from 41.4 in July. The farmland-price index is well above the record low of 33.1 from March of this year.
David Norton, CEO of Filley State Bank in Filley, Neb., said, "Farm real estate sales are limited, but I just had 120-acre dryland parcel go for $3,000 per acre."
We see the stable to slightly higher farmland prices as a positive as the rural economy continues to deteriorate. Farmland values are based on the long-term expectations of the farming economy. Farmland owners and buyers understand the importance of farmland and agriculture in the coming years.
Will Rogers said, "Buy land. They ain't making any more of the stuff."
- Colvin
Creighton University economist Ernie Goss said, "The RMI has remained below growth neutral for 18 consecutive months. After appearing to bottom out earlier in the year, the index, which gauges overall economic activity, appears to be moving sideways or with little change."
In the August survey, bankers were asked about their expectations for 2009 crop yields. 60% responded that crop yields would be up significantly from last year, while only 8% expect yields to decline from 2008 levels. Despite increased yields, bankers still expect 2009 farm income to be below 2008 due to weak grain prices.
Bradley Robson, CEO of First State Bank in Belmond, Iowa, said "We have missed the bad weather to date, the hail and wind. Crops look excellent and should be 20 percent above last year’s yields. But, with crop prices down, look for 2009 farm income to be off 2008 levels significantly."
Farmland prices
Despite the expectation of lower farm income, the farmland-price index rose slightly in August to 43.7 from 41.4 in July. The farmland-price index is well above the record low of 33.1 from March of this year.
David Norton, CEO of Filley State Bank in Filley, Neb., said, "Farm real estate sales are limited, but I just had 120-acre dryland parcel go for $3,000 per acre."
We see the stable to slightly higher farmland prices as a positive as the rural economy continues to deteriorate. Farmland values are based on the long-term expectations of the farming economy. Farmland owners and buyers understand the importance of farmland and agriculture in the coming years.
Will Rogers said, "Buy land. They ain't making any more of the stuff."
- Colvin
Posted by Colvin & Co. at 8/24/2009 7:04 AM 
Categories: Farmland
Tags: agriculture commodities farmland
Categories: Farmland
Tags: agriculture commodities farmland
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