Rural Iowa’s economy continued to grow in December behind the continued strengthening in the value of farmland, 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 major factor in this 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 that farmland prices in Iowa climbed 29% this year to an average of $ 9,751 an acre, the highest nominal amount. raised in 80 years.
Part of this increase is the result of higher than expected yields and higher commodity prices, which higher farm incomes.
“Crop yields are incredible for the lack of moisture, except in very rare cases depending on the type of soil,” Jim Brown, CEO of Hardin County Savings Bank in Eldora, said in the report.
The Rural Mainstreet Index represents a first look at the economy of rural areas of the country that depend on agriculture and energy, focusing on around 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 in the previous month. Despite the decline, this was the 13th consecutive month that the index remained above neutral growth,
Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton, said strong grain prices, record interest rates and rising exports have helped expand the rural economy.
“Seven in 10 bankers described their local economy as expanding, while only 6.7% said their local economy was in a modest economic downturn,” Goss said.
For the region as a whole, the farmland price index improved to a record 90, up nearly 5 points from the previous record in November.
Another positive indicator for the rural economy was the survey confidence index.
After declining for five consecutive months, the confidence index rebounded in December to 55.2, from 48.4 in November.
The report also showed that bank CEOs said annual cash rents for rain-fed and ungrazed farmland climbed to $ 262, from $ 218 in February 2020, and sales of farm equipment peaked. level in more than 10 years.
Brown, of the Hardin County Savings Bank, said only 3.3% of borrowers were in financial difficulty with an increased need for borrowing, and that he saw “very strong working capital and even net worth gains. from fringe customers “.
Photo submitted by the Iowa Soybean Association.