According to the Rural Mainstreet Index, more than 40 percent of lenders in the heartland expect farm loan defaults to be the biggest challenge this year.
It is the latest sign of pessimism among bankers about the rural economy. January’s Rural Mainstreet Index, an indicator of bank CEO’s expectations for the economy six months out, climbed more than a point to a “still anemic” 45.7 from December’s 44.3. The index, which ranges from zero to 100 with 50 representing growth-neutral, is based on a survey of bank presidents and CEOs in 10 states.
“Tariffs, trade tensions, weak agriculture commodity prices and the partial federal government shutdown negatively influenced the economic outlook of bank CEOs,” said Ernie Goss, an economics professor at Creighton University’s Heider College of Business in Omaha, Neb.
Among bankers surveyed, 45.7 percent also reported little or no economic growth in their areas, followed by 31.4 percent reporting a “modest economic downturn” and 22.9 percent citing “modest economic growth.”
About 14 percent of the bankers surveyed cited farm credit competition and nearly 12 percent falling farmland values as other economic challenges, according to the index.
Source: Victoria A. Rocha, NRECA