Rural bankers are becoming increasingly concerned about the agricultural economy as higher fuel and fertilizer costs put additional pressure on producers.
Creighton University’s Rural Mainstreet Index fell to 44.7 in September, down sharply from 50.3 in August. A reading below 50 indicates economic contraction in rural areas covered by the survey.
Creighton University economist Ernie Goss said rising production expenses are outweighing some of the optimism generated by stronger grain prices.
Bankers participating in the survey identified fertilizer and fuel costs as significant challenges for farmers. About 53% listed fertilizer costs as a major concern, while 47% pointed to higher fuel prices.
Weakness also continues in the agricultural equipment sector. The farm equipment sales index dropped to 25, marking the 37th consecutive month the index has remained below the growth-neutral level.
Trade policy is another concern among rural lenders. According to the survey, 79% of bankers said tariffs are negatively affecting agriculture and livestock economies in their areas.
Expectations for the months ahead also weakened considerably. The six-month economic confidence index dropped to 26.3, indicating bankers remain cautious about prospects for the rural economy.
The results come as producers contend with elevated operating expenses while making marketing, equipment and financing decisions heading into the final months of the year.