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Rural economy grows with stronger farmland, commodity prices


Iowa’s rural economy grew in November, in part because of stronger farmland prices, according to a monthly survey of bank managers and CEOs in agriculturally dependent communities.

According to Creighton University’s Rural Mainstreet Index, released Thursday, Iowa’s index jumped to 70.9 in November, from 65.4 in October. An increase in the state’s farmland price index to 84.9, from 81.9 the prior month, was cited as a contributing factor to the rise in Iowa’s overall index ranking.

The survey is an early look at the economy in 10 agriculturally and energy-dependent states, including Iowa. It focuses on about 200 rural communities with an average population of 1,300. The index ranges from zero to 100, with a ranking of 50 indicating neutral growth.

November’s numbers were not all rosy for Iowa. The state’s new-hiring index for November dipped slightly to 69.6, from 70.2 in October, the report showed. Despite recent gains, the U.S. Bureau of Labor Statistics shows that compared with pre-COVID-19 levels, Iowa lost 2.6% of its nonfarm employment.

For the region as a whole, November’s index rose to 67.7, up from 66.1 in October, the 12th straight month the index has been above growth-neutral.

Ernie Goss, the Jack A. MacAllister, chair in regional economics at Creighton, said solid grain prices, low interest rates and growing exports were factors in November’s increase.

“USDA data show that 2021 year-to-date agriculture exports are more than 23.2% above that for the same period in 2020,” Goss said.

The region’s farmland price index increased to a record high of 85.5 in November, up 4 points from October.

Despite strong performance in some categories of the survey, confidence among rural bankers shrunk in the past month, with the index dipping below neutral growth to 48.4, down from 51.8 in October, the fifth straight month it has declined.

The home sales index also dipped in November to a still strong 65, down from 73.2 in October. The retail sales index climbed to 58.1, from October’s 55.4.

“Healthy farm prices and federal stimulus spending are having very positive impacts on Rural Mainstreet retail sales and home sales,” Goss said.

This month’s survey also asked bankers to forecast holiday retail sales in their area. According to their responses, bankers expect holiday sales to expand by 5.7% this year compared with the same period in 2020.

Bankers also responded to the infrastructure bill recently passed by Congress, with about 30% saying they expect the bill to be more negative than positive for agriculture. But 26.7% said the broadband portion of the bill would have the greatest effect on their local economy.

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