GOSHEN COUNTY – A monthly agriculture economy report found a combination of weak commodity prices with struggling farm income continues to hamper the overall economy of rural communities across the Plains and Midwest.

The Rural Mainstreet Index report, released late last month, declined from a rating of 42.2 in August to 39.6 in September. The study surveys community bank presidents and CEOs across a 10-state area, which includes Nebraska and Wyoming, ranking reported economic growth on a scale of 0 to 100. 

A rating of 50 indicates neutral economic growth, said study researcher Dr. Ernie Goss, an economist with the Creighton University Heider College of Business. Less than 50 indicates negative growth.

A rating of 50 or greater “would be considered pretty good,” Goss said. “In 2013, for example, when farm income was pretty good, we were probably in the 57-58 range generally. All the way up into the low-60s would be considered good, positive growth.”

This is the lowest overall ranking in 2017.

The ratings take into account banker’s reports of farm loan restructuring as well as increased requirements of increased collateral requirements for loans, for example, Goss said. With farm incomes continuing on a weak footing, more than half the bankers surveyed – 51.2 percent – reported restructuring while almost 20 percent reported increasing the amount of collateral required to secure
a loan.

The Wyoming RMI for September declined more than two points, from 41.2 in August to 39.0 in September, while farmland and ranchland price indices dropped to 35.6, down from the 42.3 August rating. 

One bright spot in the report for Wyoming showed solid growth in the state’s new hiring index, from 47.5 in August to 53.7 in the

In Nebraska, the September RMI decreased from 42.9 in August to 40.2 for September while the farmland price index dropped from 43.5 to 36.4 during the same period. The new hiring index increased in Nebraska as well, from 55.2 in August to 58.8 in September.

 “It’s struggling,” said Dr. David “Tex” Taylor, regional agriculture economist at the University of Wyoming Extension Service in Laramie. “A lot of the economy in Wyoming is fairly dependent on energy. We’re seeing some recovery, but it’s slow.”

The larger cities in the state are experiencing a mix when it comes to the economic outlook, Taylor said. The overall economy in Cheyenne, for example, is doing better than in some indices while Casper is not faring as well. Nor, he said, is the overall state-wide economy doing much better.

“Populations are down and the number of jobs are reduced,” Taylor said. “I think it’s somewhat stabilized, but I think the economy has been hit pretty hard.”

The report goes beyond just the effects the agricultural outlook has on the overall economy in the study area, Goss said. The impact of the energy sector – which Taylor called the “big player” in Wyoming overall, behind tourism and agriculture – is also taken into account.

“A uniquely Wyoming issue is the budget pressure on the state government when energy is not selling,” Goss said. “The output of the (Wyoming) energy sector is not nearly as great as it was.

“But I do think it would be wrong to paint a totally negative picture,” he said. “Overall, the numbers for September were lower but, overall, the negatives have been getting less negative. It’s sort of trending upward overall.”

Part of the problem comes from weak commodity prices making it more difficult for producers to make payments that, five years ago, would have been easier to make, said Jessica Groskopf, regional farm economist at the University of Nebraska Panhandle Research and Extension Center in Scottsbluff. That means producers are going to their banks to restructure loans to decrease monthly payments and push the debt on both equipment and land further into the future.

“Inputs haven’t adjusted to the markets,” Groskopf said. “Restructuring their loans or maybe going to the bank for the first time in years, these guys really have to look at their inputs. 

“As they plan for 2018, what do they really need to make every bushel of corn or wheat?” she said. “They can’t control the price of fuel or those things, so they have to start looking at every penny, across
the board.”

And, particularly in rural American, the economies on the farm and in the cities and towns are intimately intertwined. What creates financial difficulties on the farm eventually makes its way to the equipment dealer, the parts and repair businesses and the grocery store in town, Groskopf said.

“If you take all of the businesses in (Scotts Bluff) County, farm and non-farm, farms make up about a quarter of the businesses,” she said. “Even at that rate, when a quarter of your businesses are in a difficult time period, that makes it difficult for Main Street.

“In Goshen County, it’s the same setup,” Groskopf said. “We’re talking about the same crop mix, the same weather concerns. It’s something locally we really need to watch, with such a large percentage of the local economies dependent on farms and ranches.”