(Radio Iowa) – A monthly survey of bank C-E-Os in rural areas of Iowa and other Midwest states indicates the region’s economy has dipped to its lowest level since May of 2020. Creighton University economist Ernie Goss conducts the survey and issues a Mid-America Mainstreet Index each month. “It was not good news for the month of October and certainly looking ahead, the outlook is also negative for these bank CEOs in looking at the farm economy,” Goss said. Goss says a firm majority of the bankers indicated President Trump’s approach to trade with China is about right, but nearly 85 percent of the bankers surveyed support emergency federal payments to farmers due to the financial hit of trade losses.

“Some of the bankers said, ‘Well, we’d like to see higher grain prices, for example, than getting that support,’ but nonetheless there was support for that, but again that’s not going to make up for the downturn in what we’re seeing in lower grain prices througout the region,” Goss said. “…We’re seeing below break even income, cash flow for farmers that depend heavily on grain, that is.” Goss says there may be one bright spot in the survey, about farm loans.

“Delinquency rates are very low right now especially given the weakness in farm income. In other words, the farmers have been judicious about borrowing and the lenders have been judicious about lending,” Goss said, “…On the flip side of that farm equipment sales have really been suffering in the region.” Goss says farm equipment sales have dropped for 26 straight months. That’s a hit to Iowa where Deere and Company has been laying off workers and scaling back production. Goss says due to rising costs for fertilizer and other expenses, there’s been an increase in the amount farmers are borrowing. “I expect that to continue to move higher and, of course raising the risk out there,” Goss said, “and we’ve seen a lot of volatility in the farm outlook and obviously that’s a real issue going forward.”

Goss says the value of farmland is holding up much better than farm income. The rural bankers surveyed expect farmland prices to decline by three to four percent in the next 12 months, according to Goss.