Rural Mainstreet Index Signals Continued Farm Economy Concerns in 2025
The Latest Rural Mainstreet Index (RMI), a key barometer of the agricultural economy, indicates lingering economic challenges for farmers in 2025.
The Index, compiled by economists at Creighton University, rose slightly to 44 in May, up from 40 in April.
Though, this marks the 20th time in the last 21 months that the RMI has remained below the growth-neutral threshold for this 10-state region heavily reliant on farming and energy sectors.
Economists warn that while there has been a slight uptick, meaningful headwinds persist for the agriculture sector, which can affect the Rural Mainstreet overall economy.
Low commodity prices and potential trade conflicts continue to cast a shadow over the farm economy.
Bank Ceos Express Concerns Over Farm Income
According To Ernie Goss, Jack A.Macallister Chair In Regional Economics At Creighton University’s Business School, the outlook for 2025 farm income remains a significant concern among bank Ceos.
In a recent survey, nearly one in four bankers identified tariff retaliation from trading partners as the top risk facing farmers in 2025, while a substantial 68% cited lower farm commodity prices as the primary threat.
“The Impact Of Lower Commodity Prices Can Ripple Through Rural Communities, Affecting Everything From Farm Equipment Sales To Local Retail Businesses,” Goss noted.
Did You Know? The U.S. Department Of Agriculture (Usda) projects that net farm income will decrease by 17.7% in 2025 compared to 2024, highlighting the financial strain on agricultural operations.
Calls For Tax Cut Extensions And Tariff Reassessments
More Than Half (54%) of Rural Bank Ceos are advocating for an extension of the 2017 federal tax cuts.
Terry Engelken, Vice president At Washington State Bank In Washington, Iowa, suggested raising the state and local tax (Salt) limit to $25,000 and eliminating taxes on tips and Social Security, while maintaining taxes on overtime.
Jeffrey Gerhart,Former Chairman Of The Bank Of Newman Grove In Newman Grove,Neb., voiced strong opposition to tariffs.
“As a Former Agricultural banker, I’ve Never Been A Fan Of Tariffs,” Gerhart Stated. “My Concern is That It Won’t End Well For Our Farm Economy And Our Rural Communities. Congress Needs To Step Up And Do Their Job.”
Planting Progress And Regional Disparities
Jim Eckert, Executive Vice President And Trust Officer Of Anchor State Bank In Anchor, Ill., reported that planting is nearing completion in central Illinois, while southern Illinois farmers have faced challenges due to excessively wet conditions.
These regional differences highlight the unpredictable nature of agriculture, which further complicates economic forecasting.
Agricultural Commodity Prices And Farmland Values Under Pressure
Low Agricultural Commodity Prices were identified as the foremost concern for 2025 by 68% of survey respondents, while 23.5% pointed to higher tariffs.
The Farmland Price Index has remained below growth neutral for 12 of the last 13 months, dropping to 39.6 in May from 41.7 in April.
Elevated Interest Rates, higher input costs, and tariff-induced volatility are key factors contributing to this downward pressure on farmland values.
Only a small minority (8%) of bank Ceos expressed optimism about farmland prices for 2025.
Pro Tip: Farmers can mitigate risk by diversifying crops,exploring value-added products,and implementing precision agriculture techniques to optimize resource use and reduce costs.
Impact Of trade And Export Declines
Trade Data From The International Trade Association (Ita) reveals that regional exports of agricultural goods and livestock fell by 19.3% in the first quarter of 2025, dropping from $3.4 billion in 2024 to $2.7 billion.
Mexico remains the top destination for regional agricultural exports, accounting for over half (50.6%) of the total.
The Decline In Exports Adds Another Layer Of Complexity To The Economic Challenges Faced By Farmers In the Rural Mainstreet Region.
Farm Equipment Sales Remain sluggish
The Farm Equipment Sales Index saw a slight increase to 23.9 in May, up from 17.4 in april.
Despite this modest advancement, the index has remained below growth neutral for 21 consecutive months, reflecting the ongoing financial strain on farmers.
High Input Prices, tighter credit conditions, low farm commodity prices, and market volatility stemming from tariffs continue to negatively impact farm equipment purchases.
Mixed Results Across Other Economic Indicators
The Rural Mainstreet Index comprises several sub-indexes that provide a more granular view of the regional economy.
While some sectors showed signs of improvement, others continued to struggle.
| Economic Category | may Index | April Index | Trend |
|---|---|---|---|
| Loan Volume | 75.0 | 70.8 | Increased |
| Checking Deposits | 45.8 | 58.7 | Decreased |
| Certificates Of Deposit (Cds) | 60.4 | 58.3 | Increased |
| New Hiring | 52.1 | 43.8 | Increased |
| Confidence | 30.0 | 36.0 | decreased |
| home Sales | 47.9 | 45.8 | Increased |
| Retail Sales | 41.7 | 39.6 | Increased |
- Banking: The Loan Volume Index increased to 75 from 70.8.The Checking Deposit Index decreased to 45.8 from 58.7. Cds And Other Savings Instruments rose to 60.4 from 58.3, boosted above growth neutral due to Federal Reserve interest rate policies for 30 consecutive months.
- Hiring: The New Hiring Index improved to 52.1 from 43.8, even though job gains for non-farm employers have been weak in recent months.
- Confidence: Rural Bankers remain pessimistic, with the Confidence Index dropping to 30.0 from 36.0. “Weak Grain Prices, Negative Farm Cash Flows, Combined With Tariff Retaliation Concerns Pushed Banker Confidence Lower,” Goss Explained.
- Home and Retail Sales: Home Sales remained soft with a May reading of 47.9, up from 45.8. Regional Retail Sales remained weak with an index of 41.7, but up from 39.6.
Iowa’s Mixed Performance
In Iowa, the Rural Mainstreet Index reading improved to 46.8 from 39.8 in April.
Iowa’s Farmland Price Index for May increased to 41.6 from 36.8 in April.The New Hiring Index for May increased to 44.9 from 37.5.
However, Trade Data shows that Iowa exports of agricultural goods and livestock decreased by $23 million in the first quarter of 2025, a decline of 4.7%.
Mexico remains the top destination, accounting for 70.9% of Iowa’s agricultural exports.
Long-Term Strategies For Farm Economy Resilience
Addressing the challenges highlighted by the Rural Mainstreet index requires a multi-faceted approach.
Farmers,policymakers,and financial institutions must collaborate to build a more resilient and lasting agricultural economy.
- Diversification: Encouraging farmers to diversify their crops can reduce reliance on single commodities and create new revenue streams.
- Risk Management: Implementing effective risk management strategies, such as crop insurance and hedging, can help farmers weather economic downturns.
- Value-Added Products: Supporting the development of value-added agricultural products can boost farm income and create local jobs.
- Infrastructure Investment: Investing in rural infrastructure, including broadband internet access, can improve market access and enhance productivity.
- Trade Negotiations: Pursuing fair and balanced trade agreements can expand export opportunities for American farmers.
The Future Of The Farm Economy Hinges On Proactive Measures And Collaborative Efforts To Navigate The Complex Challenges Ahead.
Frequently Asked Questions About The Rural Mainstreet Index
- What Factors Contribute To The Downturn Reflected In The Rural Mainstreet Index?
- Lower Commodity Prices, trade tensions, elevated interest rates, and high input costs all contribute to the economic challenges reflected in the index.
- How Reliable is The Rural Mainstreet Index As An Economic Indicator?
- The RMI Is a reliable indicator,compiled by economists at Creighton University,based on a survey of bank Ceos in rural,agriculturally dependent areas.
- What Policy Changes Coudl Positively Impact The Rural Mainstreet Economy?
- Extending Tax Cuts, reassessing tariff policies, and investing in rural infrastructure are potential policy changes that could help stimulate the rural economy.
- How Can Farmers Adapt To The Challenges Highlighted By The Rural Mainstreet Index?
- Farmers can adapt by diversifying crops, managing risks effectively, and exploring value-added agricultural products.
- What Role Does International Trade Play In The Rural Mainstreet Economy?
- International Trade Plays A Significant Role, As evidenced by the impact of tariff retaliation and fluctuations in agricultural export volumes.
- What Are The Implications Of Declining Farmland Values In The Rural Mainstreet Region?
- declining Farmland Values Can lead To Reduced Wealth For Farmers, tighter credit conditions, and decreased investment in agricultural operations.
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