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Rural Mainstreet Index shows strain of farm economy

The Rural Mainstreet Index for February shows the rural economy expanding but the strain of tariffs and low ag commodity prices continues to weaken the farm sector.

Dr. Ernie Goss with Creighton University in Nebraska tells Brownfield the survey of ag bankers in 10 states found two-thirds of them increasing the collateral requirements on farm loans, “They’ve not only increased those requirements and rejected a higher percentage of loans they’ve restructured a higher percentage of loans. That is, extending the payment periods and reducing the monthly payout for the farmers.”

If commodity prices don’t improve, he says, “We’re going to see some bankruptcies in the, say, the 2 to 3% range and that’s significantly up.”

Goss says the LONG-term outlook for agriculture, however, is still very good, “The world needs the output from the most productive farmers on the face of the earth and that’s going to continue. U.S. agriculture will win this battle, in my judgment.”

Goss says farm sizes WILL increase long term as some marginal farm producers have to sell to more successful ones.

Ag bankers are surveyed for the Mainstreet Index in 10 states including: Illinois, Iowa, Minnesota, Missouri, Nebraska and South Dakota.