Rural MidAmerica’s mood remains negative, according to the monthly reading of Creighton University’s Rural Mainstreet Index (RMI). For the 16th time in the past 17 months, the overall RMI is below the 50.0 reading in January, reports the 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, Ill., says, “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 remains 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,” observes Creighton University’s Dr. Ernie Goss, who conducts the survey.
Other banker comments from the survey:
- Jeff Bonnett, Havana National Bank, expects more than 29% of grain farmers in his area to experience negative cash flow for 2025.
- Jim Eckert, Anchor State Bank CEO, Anchor, Ill., states, “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, reports, “Most of our cash rents are from $275 to $350.”
Farming and ranch land prices:For the 8thtime in the past nine months, farmland prices are 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,” notes 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.
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,” observes Goss.
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, continue to push banker confidence below growth neutral,” says Goss.
The survey represents an early snapshot of the economy of rural agriculturally- and energy-dependent portions of the nation. The Rural Mainstreet Index 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.