Rural Mainstreet Index Pt 2

From the Ag Information Network, I’m Bob Larson. The Rural Mainstreet Index for August dropped lower for the fifth-straight month. However, the August edition of the index also broached a couple of first-time topics with agricultural bankers. For the fifth-straight month in August, the Rural Mainstreet Index once again dropped.

Creighton University Economics professor, Dr. Ernie Goss says despite looming challenges, ag bankers expect farmer default rates on loans will stay low …

GOSS … “They entered this downturn or slowdown in good cash positions. In other words, we've seen very good agricultural commodity prices even as input prices have grown, but the income of farmers is at a pretty good level, and, of course, they look out there, and we saw a decline of 1.7 percent. That's the average estimate for bankers out there in terms of delinquencies. We asked the same question a couple of months ago, and there was much the same negative. In other words, they expected a decline in delinquencies of farm loans, and that's good news.

Despite that bit of good news, Goss says bankers are still very worried about the future …

GOSS … “We saw the bankers are still not very optimistic about the economy. Whether it’s in terms of higher interest rates, labor shortages, and overall, the global economy, there are some real concerns about the global economy for a region that's dependent on exports. In other words, exports to China, to other parts of Asia, and, of course, Europe as well."

Goss says ag bankers are reporting that the economy is contracting slightly, but they expect this downturn to continue, and they're pretty pessimistic about that.