You might think farmers didn't do very well in McLean County last year because of the drought. You would be wrong because of high commodities prices in 2012. Ed Scharlau the Vice Chair of Busey Bank tells a business audience in Bloomington that at $529 million in total ag revenue, 2012 was the second best year ever in McLean County. And Scharlau says that is not even the whole story.
"So if you add the $95 million in crop insurance to the reported figure of agricultural output, the farmers in McLean County had the best year they have ever experienced.
Crop insurance payments amounted to 15% of the total ag revenue in the county. Scharlau acknowledges the obvious policy question for Congress is whether in times of high commodities prices, crop insurance payments need to be so high. But, in conversation with reporters Scharlau declined to venture an opinion. Scharlau does say farmers pay into the insurance program for years without drawing on the backstop. Farmers also do not recover all their losses. Deductibles are high. But, the nearly $4 billion in profits made by the federal crop insurance program in the previous decade have been more than wiped out by ag disasters in the last two years. Congress has yet to pass a renewal of the Farm Bill. Scharlau expects the ag sector to decline some this year.
Regarding the overall economy, Scharlau says McLean County is recovering faster than other areas of the state, though slower than everyone would like. He says building permits are about even so far this year for new construction, but he would not be surprised if that picks up in the second half of 2013.
"But as people sense that the rates are going up, they will tend to go out and buy or build because they think they can get a better rate than if you wait for a year or two."
Scharlau says he would not be surprised if mortgage rates will be up to five percent by the end of the year.
"Back in 2004 there were 700 new homes built in Bloomington Normal. This year there will be somewhere around 275. So, we have a long way to go. But the other thing that is happening is that the population increase in Bloomington-Normal is much different than most areas in the state of Illinois."
Scharlau says area population has risen from 169,572 in 2010 to 172,281 in 2012. Also in the housing sector prices of have bottomed out and are beginning to rise after years of stagnancy. Scharlau says it is not now uncommon to get multiple offers on homes for sale and some are above the asking price, which he says, has not happened for a long time.
Scharlau says business creation is also a strength in McLean County with 139 new retailers collecting sales tax last year. He says that 3.5% increase is unusually high among Illinois counties..
"It's one of the shining counties in the state. It's not as rapid a recovery as we have experienced in other recessions, but it has not been nationwide either."
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