The Creighton University Rural Mainstreet Index for February fell but remained above growth neutral. The monthly survey of bank CEOs in rural areas of a 10-state Midwest region dependent on agriculture and energy sank to 50.2 from January’s 51.5.
This was the 11th time in the past 12 months the index has remained above growth neutral. The index ranges between 0 and 100 with 50.0 representing growth neutral. Organizers of the survey say weak farm income has pushed almost two-thirds of banks to increase collateral requirements on farm loans.
Ernie Goss of Creighton University says the survey shows the rural economy is “expanding outside of agriculture,” however, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector.”
Almost two-thirds of respondents, or 62.6 percent, indicated collateral requirements have been raised on farm loans. This compares to 45.2 percent for February 2018. Almost one-third, or 30.3 percent of bankers, reported that a higher percentage of farm loan applications had been rejected.