Farm Income 2025: Weak Outlook – Goss Analysis
- The rural Mainstreet Index (RMI),a key indicator of economic conditions in rural areas,rose to 44 in May,according to Creighton University economists.
- Ernie Goss,who chairs regional economics at Creighton University’s business school,noted that bank CEOs anticipate continued weakness in farm income throughout 2025.
- A monthly survey of rural bank CEOs, which informs the RMI, revealed that 54% of respondents support extending the 2017 federal tax cuts.
Bank CEOs are bracing for a arduous year. This analysis from News Directory 3 reveals a weak outlook for farm income in 2025, driven by concerns over lower agricultural commodity prices and potential tariff retaliation, according to the latest Rural Mainstreet Index (RMI). The RMI edged up slightly to 44 in May, yet the financial health of the agriculture sector remains precarious wiht farmland prices remaining stagnant and a significant drop in agricultural exports. Key figures, like Ernie Goss, highlight that elevated interest rates and input costs further complicate matters. Executives overwhelmingly cited low commodity prices as the top risk factor, with tariffs also a major source of worry. Discover what’s next for farmers as they navigate these complex pressures.
rural Mainstreet Index Shows Slight Improvement Amid Farm Income Concerns
Updated May 31, 2025
The rural Mainstreet Index (RMI),a key indicator of economic conditions in rural areas,rose to 44 in May,according to Creighton University economists. This is up from 40 in April. though, the index has remained below the growth-neutral threshold for 20 of the last 21 months, reflecting ongoing challenges in the agriculture and energy sectors across the 10-state region.
Ernie Goss,who chairs regional economics at Creighton University’s business school,noted that bank CEOs anticipate continued weakness in farm income throughout 2025. A significant portion of these executives view tariff retaliation and declining farm commodity prices as primary threats to farmers.
A monthly survey of rural bank CEOs, which informs the RMI, revealed that 54% of respondents support extending the 2017 federal tax cuts.
Terry Engelken,vice president of Washington State Bank in Washington,Iowa,suggested raising the state and local tax (SALT) deduction limit and eliminating taxes on tips and Social Security,while maintaining taxes on overtime.
Jeffrey Gerhart, former chairman of the Bank of Newman Grove in Newman Grove, Neb., voiced concerns about the current administration’s tariff policies, fearing negative consequences for the farm economy and rural communities. He urged Congress to take a more active role in trade policy.
Jim Eckert, executive vice president and trust officer of Anchor State Bank in Anchor, Ill., reported near-completion of planting in central Illinois, while noting delays further south due to wet conditions.
Low agricultural commodity prices are a major concern for 2025,with 68% of respondents identifying them as the top risk factor. About 23.5% cited higher tariffs as the primary risk.
Farmland prices have struggled, remaining below growth neutral for the 12th time in 13 months. The farmland price index decreased to 39.6 in May from 41.7 in April.
Goss attributed the downward pressure on farmland prices to elevated interest rates, increased input costs, and tariff-related volatility. Only a small percentage of bank CEOs expressed optimism about farmland prices for 2025.
Trade data from the International Trade Association (ITA) indicates a 19.3% drop in regional exports of agricultural goods and livestock during the first quarter of 2025, compared to the same period in 2024. Exports fell from $3.4 billion to $2.7 billion. Mexico remained the top destination, accounting for over half of the region’s agricultural exports.
The farm equipment sales index showed a slight increase to 23.9, up from 17.4 in April, but remains weak.
Goss explained that high input prices, tighter credit conditions, low farm commodity prices, and market volatility from tariffs continue to negatively impact farm equipment purchases.
Other components of the Rural Mainstreet Index revealed mixed results:
- Banking: The loan volume index increased, while the checking deposit index decreased. Certificates of deposit (cds) saw an increase, boosted by Federal Reserve interest rate policies.
- Hiring: The new hiring index improved slightly, but job gains for non-farm employers have been generally weak.
- Confidence: Rural bankers remain pessimistic about the economic outlook, with the confidence index declining due to weak grain prices, negative farm cash flows, and tariff concerns.
- Home and retail sales: Home sales remained soft,and regional retail sales remained weak,although both showed slight increases from April.
In Iowa,the overall index reading improved slightly.The state’s farmland price index and new hiring index also saw increases. Though, Iowa’s agricultural exports experienced a decline in the first quarter of 2025, with Mexico being the top destination.
What’s next
Economists will continue monitoring the Rural Mainstreet Index and related economic indicators to assess the ongoing challenges and potential opportunities facing the agricultural sector. The impact of trade policies,commodity prices,and interest rates will be closely watched in the coming months.