Farmers Seem to Be Doing Well This Year

Story first appeared in USA Today.

The economy remains strong in rural areas of 10 Midwest and Western states because of the health of agricultural businesses there, according to a new survey of banks serving rural areas.

The overall economic index included in the monthly Rural Mainstreet survey rose to 58.5 in May from April's already healthy 57.1. Any score above 50 on the index, which ranges from 1 to 100, suggests growth in the months ahead.

The survey covers parts of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming, focusing on 200 rural communities with an average population of 1,300.

The president of Havana National Bank in Havana, Ill., said farmers appear to be off to a good start this spring with early planting and great early growing conditions.

But a Creighton University economist said even though the May numbers are positive, he believes the region's economic growth will slow in the months ahead as the global economy weakens and crop prices decline.

The farmland index declined to 64.6 in May from April's 69.4, but it remains well above 50, suggesting that prices for farmland will keep increasing.

The Federal Reserve Bank of Kansas City said recently that farmland in its territory, which includes several of the states in the Rural Mainstreet report, jumped more than 25% in the first quarter.

The farm equipment sales index increased to 65.1 from April's 62.4 suggesting farmers also continue to buy new equipment. Including an increased amount of sales for Farm Tires and Agri Tracs for planting.

Farm income remains strong because of increasing demand for U.S. crops from developing nations. Strong farm income and the current low interest rates have contributed to higher farmland prices and equipment sales, including Agri Trac sales.

The May hiring index was 59.2, just below April's 59.3 reading. Goss said job growth varies widely across the region with some of the strongest employment growth coming in areas where significant oil, natural gas and coal mining are happening. For example, rural parts of North Dakota and Colorado saw better job growth than Nebraska and Missouri.

The confidence index, which measures how confident bankers are in the economy over the next six months, remained strong at 60.2 in May even though it was slightly lower than April's 60.6.

The home sales index climbed to 65.2 in May from April's 60.8, and the retail sales index improved to 54.7 from April's 52.9.

Bankers said they were seeing more demand for loans, so the May lending index grew to 56.9 from April's 52.8.

The checking deposit index decreased to 62.9 in May from April's 72.6. And the savings index dropped to 41.7 in May from April's 53.5, suggesting bank customers were putting less into savings accounts or certificates of deposits in May.

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Extreme Drought Grips Parts of South, Midwest

The Wall Street Journal

ATLANTA—An extreme drought has taken hold in parts of nine states stretching from the Southeast to the lower Midwest, damaging crops, driving up the cost of keeping livestock and putting officials on alert for wildfires.

Climatologists say the dry weather likely will continue at least until spring, raising the possibility of prolonged drought in some areas next summer.

"Six months from now, we could be in a fairly significant drought situation throughout the Southeast," said Brian Fuchs, a climatologist at the National Drought Mitigation Center, a federally funded center at the University of Nebraska that monitors drought conditions across the U.S. "The general pattern is going to show worsening."

Parts of Alabama, Louisiana, Arkansas, Mississippi, Tennessee, Missouri, Kentucky, Florida and southern Indiana are suffering "extreme drought," according to data expected to be released by the center Thursday.

That means the areas are experiencing the worst prolonged shortage of rain expected in a 25-year period. Montgomery, Ala., has seen just half an inch of rain so far this month. In Memphis, Tenn., the total is 0.01 inch.

Northeast of Memphis in Mason, Tenn., Marvene Twisdale and her husband have enough hay and water for now to feed their 10 cows. But several ponds have dried up on the farm. Ms. Twisdale, 67 years old, said the drought was the worst she has seen in 47 years there.

"I go outside every day, water my flowers and pray over them," she said. "We are waiting for rain to come."

One cause of the dryness is La Niña , a cooling of water temperatures in the eastern and central Pacific Ocean that has brought drier weather to the southeastern U.S. over the past several months.

In addition, the region hasn't been hit this year by major hurricanes or other big tropical storms, which often bring soaking rain this time of year.

In coming months, Mr. Fuchs expects more areas to be placed in the "extreme drought" category, second in severity to "exceptional drought."

Wildfires are on the rise in the lower Mississippi River valley and the Ohio River valley, according to forestry officials in several states. Trees are losing their leaves earlier because of the dryness, prompting bans on outdoor burning.

"We are anticipating some pretty big fires in the next few weeks," said Lynn True, a spokeswoman for the Kentucky Division of Forestry.

Yields for some cotton and soybean farmers in Alabama may be only half as large as normal this fall, said state climatologist John Christy. "Signs don't look good for a recovery anytime soon," he said.

Wheat, cotton and peanut harvests have already shrunk in parts of the South, according to Mr. Christy and others. Ponds and creeks have dried up and many rivers have fallen.

Cattle farmers are stockpiling feed and hay, and setting up troughs for their livestock. Normally, cattle could just graze in pastures and drink from ponds or creeks, helping farmers avoid having to pay for feed.

Some livestock farmers have begun to sell off some of their herds to slaughterhouses and other farmers outside the region as the cost of keeping them rises, said Shane Gadberry, a professor with the University of Arkansas's Cooperative Extension Service.

"I don't remember one worse than this," said Gerald Scott, 65, who runs a 3,500-acre family farm in Henderson, Ken.

While the family was able to harvest most of its corn and soybean crop early, he is worried about next year.

Two lakes on his land are six or seven feet below normal levels, he said.

"If it doesn't start raining soon, it's going to be a problem come spring," he said.