Rural Mainstreet Index at lowest level since Dec. 2016; half of bankers have restructured farm loans

The latest monthly Rural Mainstreet Index indicates a drop in the financial situations of farmers in a 10-state region where agriculture and energy are critical to the economy, "sinking to the lowest level since December 2016," AgWeb reports. "The index remained below growth neutral, a sign that shows financial pressure continues to prevail on farms and ranches." The RMI is calculated by Omaha's Creighton University by surveying rural bank CEOs in Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, Wyoming and the Dakotas.; more than half of the bankers reported that they have restructured farmers' loans.

Creighton University graphic; click on it to view a larger version.

The 2017 corn crop looks to have the third-highest yield ever at 170 bushels per acre, but drought is sapping yields of other crops. Scarcity often drives up prices, but that's not happening this time due to a ready supply of commodities on the global market. That is keeping American farmers from rallying, said Ernie Goss, who does the RMI: "A lot of farmers have grain in the bins. If prices go up, you get some unloading that sort of limits any growth until we get rid of that old-crop corn." A weakened dollar could help American crops look more attractive to international buyers in the long run, but for now farmers are still struggling.

Creighton University graphic; click on it to view a larger version.

The financial stress is reflected in the RMI's figures on farm loans: "51.2 percent of bank CEOs reported restructuring farm loans; 18.6 percent of that same group also indicated they had to increase collateral requirements," AgWeb notes. Farm loan delinquencies are up 4.1 percent too. The good news is that despite four straight years of declining farm income, farm loan defaults only increased 2.1 percent this past year.