Businesses dependent on agriculture and energy are experiencing pullbacks in economic activity, according to the latest survey of Midwest rural bankers in 10 states, including Minnesota.
The Rural Mainstreet Index posted its weakest ratings in five years, with farmland prices sinking for the 16th straight month and ag-equipment sales declining to a record low level.
“The stronger U.S. dollar is undermining the farm and energy sectors by weakening agricultural exports, crop prices, livestock prices and energy prices,” said Ernie Goss, an economics professor at Creighton University’s Heider College of Business.
The monthly survey represents a snapshot of the economy, and focuses on about 200 rural communities with an average population of 1,300. Bankers are asked about current economic conditions and projected economic outlooks six months into the future.
Despite the weaker crop prices and lower oil costs, the Creighton survey group found that rural businesses are still adding workers to their payrolls, although Goss expects that to change in the months ahead.
The survey also noted that despite the weakness in farm income, non-farm investors continue to purchase farmland, with the share of outside purchasers rising from 14.4 percent last June to 17.5 percent this month.