A survey of bankers in 10 Midwest and Great Plains states reflected continued economic growth in the region, which boasts strong agricultural performance and rising commodity prices, according to a report issued yesterday.
The Rural Mainstreet Index rose to 59.7 in December, its highest level since June 2007. The index, which ranges from 1 to 100, hit 58.4 in November, 52.9 in October and 52.2 in September.
Survey organizers say that whenever the index is above 50, it suggests the economy will grow.
Creighton University economist Ernie Goss, who oversees the survey, said in news release that growth in U.S. regions tied to agriculture and energy are outpacing urban areas.
“Our survey is detecting a very healthy Rural Mainstreet economy, with the gap between urban and rural widening,” Goss said. “Bankers reported that approximately 60% of agricultural producers have contracted or sold their 2011 production. Global demand and alternative energy generation are driving the Rural Mainstreet economy higher.”
Despite the strong December numbers in the 10 states, however, Goss said he expects European economic problems to slow growth in agriculture and energy because of a strengthening dollar and weaker exports.
“This will tend to push agriculture and energy commodity prices lower in the first half of 2012,” Goss said.
The survey covers Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
One of the survey areas, farming, rose to a record high in December: to an index reading of 84.1, compared with 75.4 in November. It was the 23rd straight month the index has been above growth neutral, Goss said.
The farm equipment sales index climbed to 73.8, its highest level since February 2008.
Across all 10 states, the average cash rent was $191 an acre, ranging from $105 in Kansas to $269 in Illinois.
“Land prices appear to continue to rise,” said Don Reynolds, president of Regional Missouri Bank in Salisbury, Mo. “But, we noted that a few small tracts that were desired by multiple cash-rich buyers appeared to distort people’s thinking.”
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