While growth for the Rural Mainstreet economy remains healthy, it slowed a bit in July, according to the monthly survey of bank CEOs in a 10-state area, prepared by Creighton University, Omaha, Neb.
The Rural Mainstreet Index, which ranges between 0 and 100 with 50.0 representing growth neutral, slipped to 57.3 from June's 60.5, though still well ahead of last July's 47.3.
"Last year at this time, the drought was having a significant negative impact on the Rural Mainstreet economy. This year, ample moisture has boosted the rural economy and the banker's economic outlook," said Ernie Goss, economics professor at Creighton University.
The survey, which polls bankers on a variety of economic conditions affecting agriculture, found that the farmland-price index declined for the seventh time in eight months, falling to 58.2 from June's 58.4.
Though the farmland-price index has been above growth neutral since February 2010, lower farm commodity prices and expected declines in farm income are slowing growth in farmland prices, Goss notes.
He also expects farmland price growth to continue to weaken as a stronger U.S. dollar weighs on agriculture commodity prices.
As for projected 2013 farm income, bankers surveyed expect farm income to be down by 3% from 2012. Approximately 59.6% of bank CEOs expect farm income to be down from 2012, while only 19.5% anticipate an increase in farm income and the remaining 20.9% expected no change.
Farm equipment sales also softened for July, with an index of 50.0, down from June's 53.2.
"Farmers are getting increasingly cautious regarding economic conditions. This has been reflected in declines in our equipment-sales index and in the stock prices of agriculture equipment producers," Goss said.
Bankers' expectations for the economy six months out also fell to 56.6 from 60.0 in June, potentially due to the farm bill in limbo.
"While healthy crop conditions have fortified the economic outlook, recent weaker than expected agriculture commodity prices have lowered that outlook," Goss said. And, more than three-fourths, or 77.9%, of bankers think that Congressional passage of a new farm bill is important or crucial to the Rural Mainstreet economy.
The survey takes into account responses from breadbasket states Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.
For more detailed results, click here.