OMAHA, NEB. (RFD-TV) — Rural economies are facing continued pressure as rising fuel, fertilizer, and feed costs weigh on farmers, ranchers, and rural businesses. The latest Rural Mainstreet Index shows economic activity declining for the fifth time in six months, reaching its lowest reading since July.
Dr. Ernie Goss, an economist with Creighton University, joined Market Day Report to discuss the latest survey findings and the challenges facing rural communities.
Input Costs and Trade Uncertainty Weigh on Agriculture
In his interview with RFD-TV, Goss said farmers and ranchers face several major cost pressures, including fuel, fertilizer, and feed. He pointed to trade tensions and the conflict involving Iran as broader factors affecting those costs.
“It really comes down to two big issues, and that was true for the elections; it’s true for agriculture and livestock. It has to do with the tariff war and the other war in Iran, which has pushed those three Fs into not such a good range,” Goss said.
He said fuel costs are a particularly significant concern, with diesel prices reaching record levels. Availability is also becoming an issue for some producers.
“I spoke to a group of farmers and ranchers recently. Another issue they face is not just the price. It’s also availability,” Goss said.
Farmland Values Remain Relatively Strong
Despite pressure on farm income, agricultural land values and cash rents are holding up relatively well, Goss explained.
He said demand for farmland remains active, but much of the bidding is coming from local buyers and investors with ties to agriculture rather than international buyers.
“We’re seeing some solid numbers in terms of the price of agricultural land. Farm rents, cash rents, are holding up pretty well,” Goss said.
He added that the bankers surveyed report more local investment activity, with buyers connected to the agricultural economy.
Equipment Sales Reflect Financial Pressure
Farm equipment sales have remained below growth neutral for 38 consecutive months, another sign of the financial pressure facing producers.
Goss said tariffs on materials used in equipment manufacturing are driving up costs for companies and, ultimately, farmers and ranchers.
He said the continued weakness in equipment sales reflects the challenges producers face when deciding whether to invest in machinery and other improvements to their operations.
Transportation Costs Concern Rural Bankers
Goss said rural bank CEOs surveyed across the 10-state region remain concerned about the outlook over the next six months. Transportation costs are one of the issues they are watching most closely.
He pointed to the closure of a Tyson plant in Lexington, Nebraska, as an example of how changes in the food-processing industry can affect livestock producers.
The closure means some ranchers must transport cattle farther, adding to their costs.
“Mostly it has to do with those transportation costs,” Goss said.
He also noted that trade numbers are beginning to look better, with China returning as a buyer. Even so, transportation expenses and broader uncertainty continue to weigh on rural businesses.
