Iowa’s rural economy grew in December behind strengthening farmland values, according to a survey of Main Street bankers released last week.

According to Creighton University’s Rural Main Street Index, Iowa’s index rose to 50.2 in December, up from 47.4 in November.

The overall index for the 10-state region crept above neutral growth in December, to 51.6, a nearly five-point increase from November’s 46.8. 

The index is a snapshot of the economy of rural and agriculturally dependent communities with an average population of 1,300 people. Each month, community bank presidents and CEOs are asked about the current economic conditions in their towns, and to give a projected outlook for the next six months.

The index ranges from 0 to 100, with 50 representing growth-neutral. It measures farming and ranching, banking, hiring, confidence, and home and retail sales.

In Iowa, the state’s index for farmland prices rose to 54.1, up from 53.4 in November, helping to fuel the rise in the overall index. 

A report from Iowa State University earlier in the week showed that the state’s farmland value climbed nearly 2% this year, despite disruptions in demand for agricultural products caused by the coronavirus pandemic, and the August derecho that damaged millions of acres of corn and soybeans. The average price of farmland in Iowa rose to $7,559 an acre in 2020, from $7,432 an acre the previous year.

Despite the growth, Iowa’s new hiring index slipped to 50.3 in December, down from 54 in November. The state’s Rural Main Street economy also lost 5% of its nonfarm employment compared with a 4.5% decline in urban areas of the state, the survey showed.

For the 10-state region, it was the second time in the past three months the index rose above growth-neutral, and it reached its second highest level in the past 10 months.

That improvement was partly because of a strengthening agricultural economy, said Ernie Goss, the Jack MacAllister Chair in Regional Economics at Creighton and one of the creators of the monthly survey.

“Recent improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy,” he said.

According to the report, it was the third straight month that the farmland price index was above growth-neutral, remaining unchanged from 55 in November. It was the first time since 2013 that the survey recorded three consecutive months of rising farmland prices.

The farm equipment sales index also rose to its highest level since 2013 to 50.2, up from 42.9 in November. 

New hiring continued to be a weak spot in the December survey as the index fell to 50 from 53.2 in November. 

According to data from the U.S. Bureau of Labor Statistics that was contained in the report, nonfarm employment for the Rural  Main Street economy is down 95,000 jobs, or 2.2% compared with pre-COVID-19 levels, and by 216,000, or 4.4% from a year ago.

“It will take many months of above growth neutral readings to get back to pre-COVID-19 employment levels for the region,” Goss said.

Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included in the survey.

Other key takeaways from the survey are:
  • Bankers ranked water availability as the top 2021 farm economy issue; farm labor cost/availability was ranked as the second-biggest issue or concern.
  • Among 10 farm concerns for 2021, farm income and farm liquidity were the two issues of least concern.
  • Farmer borrowing was down for a second straight month as agriculture income grew.