NICK GOSNELL
Hutch Post
HAVEN, Kan. — The economic outlook on rural main street is not good, according to a survey released Thursday from Creighton University.
"This is a September survey of bank CEOs and rural areas of ten states including Kansas," said Creighton University economist Ernie Goss. "The overall number was down from last month and last month was not good. In fact, the number indexed 50 as growth neutral. This is well below growth neutral. In fact, back to pandemic levels when we were back in May of 2020. The agricultural sector is definitely limping along and that's what we're seeing. Their projections are 40% of the farmers are into negative income territory this year, 2024."
There are major headwinds for the grain markets in particular.
"There is global economic weakness and excess supplies," Goss said. "We've got a lot of supply out there. It's been a good year for yields, but not good in terms of prices. We need to see some of those. We need to see the prices rebound. Corn price is hovering around $4 a bushel. That's below break-even for a lot of farmers out there."
Also, the overall value of land is going down, too.
"We asked the bankers about going forward, and they, on average, expect about a 5.2% reduction in farmland prices predicted over the next year," Goss said. "We even had a high proportion, that would be one-fourth of the bankers, one-fourth expect the farmland prices to come down by 10 to 20%. Hopefully that doesn't hit, but that's pretty negative there when we look at the bankers."
A lot of the collateral for loans made to farmers is predicated on the land value they hold, so reduction in those values can give them less borrowing power.