Full text of Agricultural Survey : First Quarter 1994

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STATISTICAL

RELEASE

R E S E R V E

F E D E R A L

B A N K

0

F

D

A

L

L

A

S

Quarterly Survey of Agricultural
Credit Conditions in the
Eleventh Federal Reserve District
First Quarter 1994

Agricultural Credit
Conditions at Survey Banks
in the Eleventh District

After a Profitable
1993, Ag Bankers
Are Optimistic

Demand for Loans
Percent
100

80

Quarterly Survey of
Agricultural Credit
Conditions is compiled from
a survey of Eleventh District
agricultural bankers. This
publication is prepared by
the Federal Reserve Bank

The financial strength of producers, slightly
higher land values and banks' increasing willingness
to lend have given agricultural bankers reason to be
optimistic, according to the Dallas Fed's Quarterly
Survey of Agricultural Credit Conditions.
Survey responses indicated that Eleventh
District agricultural producers and lenders had a
profitable 1993. Favorable farm prices, farm income
and interest-rate spreads pushed agricultural lenders'
1993 profits beyond their 1992 level.

60

40

20

1989

1990

Less

of Dallas and is available

1991

•Same

1992

1993

1994

• Greater

(Continued on page 4)

without charge by writing to
the Research Department,

Funds Available for Add itional Lending

Federal Reserve Bank of
Dallas, P.O. Box 655906,

Percent

District Land Values

100

1987 dollars per acre

Dallas, TX 75265-5906,

1,200

or by telephoning

80

Irrigated
1,000

(214) 922-5254.

60
800
40

For questions regarding

600
/

information in the release,

--', '

contact Kelly Whealan,

l

(214) 922-5175, or Karen

Gee, (214) 922-5178.

'

'
Ranchl~d-

400

--- ______

200

20

,
1989

'82

'83

'84

'85

'86

'87

'88

'89

'90

'91

'92

'93

'94

1990

Less

1991

• Same

1992

1993

1994

• Greater

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks
in the Eleventh District
Rate of Loan Repayment
Percent
100

Loan-Deposit Ratios at Survey Banks

80

Average Actual and Desired Ratios
Pe rcent
~~~~~~~~~~~~~~~~-

60

60
55

40

50
20

45
1989

1990

Less

1991

Same

1992

1993

1994

• Greater

II
II

40

Actual Ratio

35

Desired Ratio

1993:1

1993:2

1993:3

1993:4

1994:1

Renewals or Extensions of Loans
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

80

Banks Reporting (Percent)

60

Ratio

Apr. 1

1993
Jul. 1

Oct. 1

52
22
16
6
5

53
16
17
8
6

46
21
16
9
8

1994
Jan. 1
Apr. 1

40

Less than 41%
41%to 50%
51% to 60%
61% to 70%
More than 70%

20

1988

1989

1990

Less

1991

Same

1992

1993

45
21
17
8
9

46
20
18
10
6

1994

INTEREST RATES-FIXED
• Greater

Average Rate (Percent)

Amount of Collateral

Loan Type

Apr. 1

1993
Jul . 1

Oct. 1

9.52
9.66
9.71
9.54

9.39
9.53
9.57
9.45

9.12
9.37
9.46
9.34

1994
Apr. 1
J an. 1

Percent

Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

100

80

9.16
9.34
9.40
9.24

INTEREST RATES-VARIABLE

60

Average Rate (Percent)

40

Loan Type

Apr. 1

1993
Jul . 1

Oct. 1

9.03
9.20
9.17
8.99

8.51
8.73
8.71
8.54

7.94
8.20
8.06
7.96

20

0
1988

9.06
9.32
9.42
9.21

1989

1990

Less

1991

• same

1992

• Greater

1993

1994

Feeder cattle
Other farm oeprating
Intermediate term
Long-term farm real estate

19 9 4
Apr. 1
Jan. 1

7.92
8.14
8.09
7.99

8.58
8.80
8.73
8.61

STATISTICAL

Rural Real Estate Values

RELEASE

CROPLANO-ORYLANO

April 1 , 1994
Region

1

Number of banks reporting land values.
Nominal dollars per acre.
n.r. -Not reported .

2

NOTE: Regional land values based on a small
number of reporting banks should be used
with caution .
All figures are preliminary.

Average
Value 2
Banks'
First-Quarter 1994

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

184

553

1.7

4.1

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

170
22
24
12
11
15
26
8
18
12
7

548
275
353
305
407
410
669
696
933
765
662

1.7
.8
0
2.1
.1
-1.0
.5
3.6
1.6
2.0
7.2

4.0
2.6
1.5
2.5
.8
-7.6
-.5
12.4
9.2
2.9
18.8

15

575

2.0

-5.7

Northern Louisiana
Southern New Mexico

10
4

658
234

1.4
1.4

5.7
- .2

Eleventh Federal Reserve District
CROPLAND-IRRIGATED
Region

12
N EW

2
3
4
5
6

7

MEXICO

Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas

8
9
10
11
12
13

Central Texas
Coastal Texas
South Texas
Trans-Pecos and Edwards Plateau
Southern New Mexico
Northern Louisiana

Average
Banks'
Value2
First-Quarter 1994

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

123

712

3.8

-.1

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

106
22
23
8
6
5
2
3
10
6
7

661
510
592
449
611
671
857
933
1234
723
1034

3.4
.9
.5
5.2
2.0
2.4
-2.8
1.7
1.8
.7
9.6

3.6
3.5
6.0
4.4
-1.3
- .2
-2.7
3.3
4.7
-14.7
4.7

14

962

13.8

26.2

9
8

893
1151

1.2
7.3

7.4
-18.3

Northern Louisiana
Southern New Mexico

RANCHLAND
Region

Average
Value 2
Banks'
First-Quarter 1994

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

185

323

3.9

9.2

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

172
20
18
11
11
16
25
15
19
11
7

377
166
126
153
229
334
588
684
821
543
471

3.5
2.5
0
1.4
0
-2.3
.4
.1
2.5
7.1
13.4

6.7
3.6
4.1
-11.5
-.1
-4.4
1.4
10.4
6.6
10.6
11.7

19

316

1.9

9.9

6
7

406
167

2.1
6.7

6.5
29.0

Northern Louisiana
Southern New Mexico

STATISTICAL

First-Quarter
Comments

RELEASE

Region 4-Soutbem Low Plains
Conditions are extremely dry; things are
pretty serious.
Region 5-Cross Timbers

District bankers were asked for any additional
comments concerning agricultural land values
or credit conditions. These comments have
been edited.

A big percentage of land sales in this area
is on dairy farms. Sales prices per acre vary
greatly, depending on facilities and water
permits.

Region I-Northern High Plains

Region 7-East Texas

High feeder cattle and corn prices may
cause feeder cattle loans to decline. Earnings
on feed-yard cattle are at the point of breakeven or, in some cases, loss. Producers are
buying grass-pasture cattle.
Land values have increased during the
past 12 months. Moisture conditions are fair.
The mild winter contributed to above-average
cattle and wheat production in areas with
favorable pasture conditions. In areas with
insect problems and dry conditions, the wheat
crop looks doubtful. Corn is being planted in
our area, and conditions are good.
Depending on weather in the Midwest,
corn prices may fluctuate . The cost of grains is
between 60 to 70 cents per pound.

Hay supplies are short. Active timber
harvesting will likely result in some additio nal
ranchland production.
Conditions for dairy operations are stable.
Prices for quality cows have increased slightly
in recent months.
Beef cattle prices are still high enough to
provide adequate margins for producers. Although beef-herd expansion has raised some
concerns, prudent, well-capitalized producers
are pleased with their operations.

Region 8--Central Texas
Our land market is dependent upo n
demand from a neighboring major city. People
are beginning to look again; land is moving
slowly. It may take years before land prices are
comparable to those of the 1980s.
We need more rain for the hay crop and
stock water in tanks.

The Federal Reserve Bank of
Dallas provides free economic data
and information through its computer-accessed bulletin boardFed Flash. Instructions, menus and
help screens assist you in accessing more than 23 categories of
data and text.

Alter a Profitable 1993,
Ag Bankers Are Optimistic

To access Fed Flash, dial

(Continued from page 1)

(214) 922-5199

or
As better prices and good crop
production boosted farmers' income,
demand for agricultural loans increased.
Loans for both producer operations and
capital equipment rose by 10.4 percent last
year, and this acceleration in loan demand
continued into the first quarter of 1994. In
the Fed's first-quarter survey, the number of
agricultural bankers reporting greater loan
demand was up 5 percent from first-quarter
1993. The number of bankers requiring
greater collateral decreased by 11 percent
from a year earlier as producers' financial
strength improved.
Net interest income increased 10.7
percent in 1993. First-quarter 1994 survey
results reflect a healthy spread between the
interest rates charged on loans and those
paid on deposits. Banks' average interest

rates on loans inched up, while the average
cost of funds remained stable in the first
quarter. Charge-offs and nonperforming
agricultural loans were down substantially
from last year's levels.
Lenders reported strong competition
for high-quality farm loans. Loan-to-deposit
ratios inched up to 44.6 percent for District
agricultural banks in the first quarter fro m
40.9 percent a year earlier. However, the
survey indicates the ratios are below
desired levels, and bankers- who report
ample funds to lend-are willing to increase
lending to creditworthy borrowers.
Values for all types of land in the
District continued to inch up slowly in the
first quarter. Survey respondents were
optimistic about the positive trend of land
values but expect them to increase slowly.

(800) 333-1953
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For more information contact:
Research Department
Federal Reserve Bank of Dallas
P.O. Box 655906
Dallas, Texas 75265-5906
(214) 922-5178