Rural Bankers: Higher Fuel and Fertilizer Costs Keep Pressure on Farm Income

Creighton University’s Rural Mainstreet Index finds that higher input costs and tariffs are pressuring farm income, equipment sales, and the rural economy.

OMAHA, NEB. (RFD NEWS) — Higher fuel and fertilizer costs are weighing more heavily on the rural economy than higher grain prices are boosting optimism, according to the latest survey of rural bank CEOs.

Dr. Ernie Goss joined us on Friday’s Market Day Report to discuss Creighton University’s latest Rural Mainstream Index, which found that the region’s overall economic reading fell below the growth-neutral threshold for the fourth time in six months.

In his interview with RFD News, Goss said volatility and trade uncertainty remain major concerns for farmers and ranchers across the 10-state region covered by the survey.

“The volatility, in other words, it’s up and down,” he said. “We’re seeing trade skirmishes with Canada.”

Farm Income Under Pressure

Goss says nearly half of the bankers surveyed reported that farm income is down.

He says farmers are dealing with both high fuel prices and concerns about fuel availability, while higher input costs are offsetting gains in commodity prices.

“Higher input prices are almost overwhelming,” Goss said. “They’re offsetting any growth in prices, the output prices.”

Tariffs Hit Agriculture and Equipment

Almost 80 percent of bankers surveyed said tariffs are negatively affecting the agriculture and livestock economy.

Goss says the effects are also showing up in farm equipment sales.

Farm equipment sales have remained below growth neutral for 37 consecutive months, according to the survey.

He says tariffs on steel and aluminum are adding to equipment production costs, while farmers and ranchers are increasingly turning to used equipment.

“That doesn’t help,” Goss said. “The prices of this equipment are going up at the same time the farmer and the farmer rancher, they’re turning to used equipment right now.”

Higher Costs Spill Into Rural Communities

Goss says higher fuel and fertilizer costs are also affecting housing and retail sales in rural areas.

He expects mortgage and equipment-purchase interest rates to move sideways or slightly lower in the near term, based on the employment report discussed during the interview.

Land Values Hold Up

Despite lower farm income, farmland prices continue to hold their value.

Goss says the strength is partly tied to who is buying farmland and the long-term outlook for agriculture.

He says farmers and neighboring landowners remain active buyers, while investors also see farmland as a long-term agricultural investment.

“It’s long-term, and long-term is land prices,” Goss said.

LEARN MORE: www.creighton.edu/economicoutlook/mainstreeteconomy

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Marion is a digital content manager for RFD News and FarmHER + RanchHER. She started working for Rural Media Group in May 2022, bringing a decade of digital experience in broadcast media and some cooking experience to the team.

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