Iowa’s rural economy continued to grow in December as farmland values continued to strengthen, according to a monthly survey of rural bankers.
According to Creighton University Rural Main Street Index, the Iowa index improved this month to 71.4 from 70.9 in November. A big contributing factor to that was a big jump in the farmland price index, which rose to 91.4 from 84.9 in November.
An Iowa State University survey released earlier this month showed farmland prices in Iowa have soared 29% this year to an average of $9,751 per acre, the nominal amount highest in 80 years.
Part of this increase is the result of higher-than-expected yields and higher commodity prices, which resulted in higher farm incomes.
“Crop yields are incredible for lack of moisture, with very rare exceptions depending on soil type,” Jim Brown, CEO of Hardin County Savings Bank in Eldora, said in the report.
The Rural Main Street Index represents a first look at the economy of rural parts of the country that depend on agriculture and energy, focusing on approximately 200 rural communities with an average population of 1,300. It covers 10 states, including Iowa.
The index ranges from zero to 100, with 50 representing neutral growth.
For the region as a whole, the index slipped to 66.7 in December, from 67.7 the previous month. Despite the decline, it was the 13th consecutive month the index remained above neutral growth,
Ernie Goss, Jack A. MacAllister Professor of Regional Economics at Creighton, said strong grain prices, historically low interest rates and growing exports have helped the rural economy expand.
“Seven out of 10 bankers described their local economy as expanding, while only 6.7% indicated their local economy was experiencing a slight economic downturn,” Goss said.
For the region as a whole, the farmland price index improved to a high of 90, up almost 5 points from the previous peak in November.
Another positive indicator for the rural economy was the survey’s confidence index.
After falling for five consecutive months, the confidence index rebounded in December to 55.2, against 48.4 in November.
The report also showed that according to bank CEOs, annual cash rents for unirrigated, non-pasture farmland jumped to $262 from $218 in February 2020, and farm equipment sales hit their all-time high. high level in more than 10 years.
Brown of Hardin County Savings Bank said only 3.3% of borrowers were financially distressed with an increased need for borrowing, and he was seeing “very large working capital and net worth gains even from marginal customers.
Photo submitted by the Iowa Soybean Association.