Ag weakness weighing on Midwest’s economy
The weakness of the farm economy in Iowa and around the Midwest continues to weigh down overall economic performance in the region, according to a new report from Creighton University in Omaha.
The university’s Rural Mainstreet Index declined in April from an already weak reading in March, according to Ernie Goss, a Creighton economics professor who compiles the monthly index from surveys of bankers in the Midwest and Great Plains states. The April index fell to 38.2 percent or well below the 50 percent considered growth neutral.
Even though agriculture commodity prices, along with energy prices, have stabilized recently, they remain well below prices a year earlier, Goss said. The April index showed that agricultural commodity prices, on average, are down 16 percent from a year earlier."
"It seems like all of the things that gave agriculture a great tailwind earlier, like the strength of the dollar and grain stockpiles, are causing big headwinds now," Goss said last week.
Some cost relief
However, the Rural Mainstreet Index also indicated that farmers could soon be seeing some relief on the cost side of the ledger.
There has been a 7 percent decline in average cash farmland rental rates in the past 12 months, the Creighton survey showed. "We are really starting to see some pressure on cash rent," Goss said. "It seems to be starting to mirror the reduction in overall farmland prices."
The report also showed continued weakness in sales of farm machinery and increased discounts.
Iowa Farm Bureau is hosting an Economic Summit on June 27 to help farmers manage their risk in this difficult economy. Learn more and register online.
Want more news on this topic? Farm Bureau members may subscribe for a free email news service, featuring the farm and rural topics that interest them most!