Full text of Agricultural Survey : First Quarter 1998

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STATISTICAL

F E D E R A L

R E S E R V E

RELEASE
B A N

D A L L A S

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

Quarterly Survey of
·cultural
Credit Conditions in the
Eleventh Federal Reserve District

Demand for Loans
Sixty-three percent of responding banks
report no change in the demand for loans.
Percent
100

First Quarter 1998

Quarter(}' Survey of

Agricultural Credit
Condillons is compiled fro m
a survey of Eleventh District
agriculniral bankers. This
publication is prepared by
the Federal Reserve Bank
of Dallas and is avai lable
without charge by writing
to

the Research Department,

Federal Reserve Bank of
Dallas, P.O. Box 655906,
Dallas, TX 75265-5906,
or by tdephoning
(21;) 922-5254.

Fo r questio ns regarding
information in the release,
contact heila Dolmas,
(21'1) 922-5191.

The First Quarter Survey of Agricultural
Credit Conditions indicates that financial conditions of Eleve nth District agricultural producers are stable overall, with a slight improveme nt in loa n repayment over the previous
quarter. Responde nts report that El ifi.o has
improved soil conditions w ith \Yelcome mo isture in many parts of the DisLrict. Although
resp ondents are optimistic about crop yields
this year, they a re also worried about prices
(see ba nke rs' comme nts on page 4) .
Here a re additional details from the survey:
• Seventeen percent of responding bankers re port a decline in the rate of loan rep ayment and increased renewals or exte nsions
compared w ith year-earlier levels. This is a
slight improvement over fo urth-quarter 1997
conditions. However, credit conditions in the
Southe rn High Plains have dete riorated since
the fo urth-quarte r survey, w ith 59 percent of
banke rs rep orting declines in the rate of loan
repayme nt and increases in loa n renewals or
extensio ns compared w ith a year earlier.
• Land values have increased substantially
over the past six mo nths. After adjusting for
inflatio n, dryland values have risen 7 percent,
ranchland values are up 6 percent, and irrigated land valu es have jumped 13 percent
since September 1997. Twenty-two percent of
resp onde nts expect fa rmland values to increase
in the second quarter, w hile most expect p rices
to stabilize. More than 40 percent of bankers in
the Cross Timbers and North Central Texas
regions expect land prices to rise in the second
quarter.
• Only 8 percent of bankers expect to increase the volume of feeder cattle loa ns in the
second quarte r fro m their year-earlier levels.
The pe rcentage expecting a decrease in the
volume of feeder cattle loans has risen from 14
percent in the fo urth quarter to 25 percent in
the first quarte r.

0
0 1:'92

01 :'93

01 :'94

Less

01 :'95

Same

01 :'96

01 :'97

01 :'98

• Greater

Funds Available for Additional Lending
Seventy-six percent of respondents report
no change in the availability of funds for lending.
Percent
100

0
01 :'92

01 :'93

01 :'94

Less

01 :'95

Same

0 1.. 96

0 1:·97

01 :'98

0 1:'97

01 :'98

• Greater

Rate of Loan Repayment
Fewer bankers report a decline
in the loan repayment rate.
Percent
100

0
01 :'92

0 1:'93

01 :'94

Less

0 1:'95

Same

01 ·'96

• 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
Renewals or Extensions of Loans
Sixty-eight percent of respondents report
the same number of renewals or extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks
Average actual and desired ratios

Percent
60

~~~~~~~~~~~~~~~~

60
40

55
50

45
0
01 :'92

01 :'93

01 :'94

Less

01 :'95

Same

01 :'96

01 :'97

Actual Ratio

01 :'98

• Greater

40
35

Desired Ratio

1997:1

1997:2

1997:3

1997:4

1998:1

Amount of Collateral
Eighty-five percent of survey respondents
report no increase in collateral requirements.
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS
80

Banks Reporting (Percent)
1997

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

0
01:'92

01:'93

01:'94

Less

01 :'95

Same

01 :'96

01 :'97

01:'98

Millions of dollars (seasonally adjusted)

Jul. 1

Oct. 1

Jan. 1

29
27
20
15
9

24
22
23
17
15

21
18
20
25
15

30
16
25
20
9

31
16
22
21
9

INTEREST RATES-FIXED

• Greater

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending rises 2 percent in the fourth
quarter of 1997 after slower growth in the third quarter.

1998
Apr. 1

Apr. 1

Average Rate (Percent)
1997
Ratio
Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

1998
Apr. 1

Apr. 1

Jul. 1

Oct. 1

Jan. 1

10.46
10.56
10.37
10.05

10.55
10.68
10.48
9.95

10.47
10.56
10.39
9.71

10.50
10.60
10.36
9.72

Apr. 1

1997
Jul . 1

Oct. 1

Jan. 1

10.42
10.53
10.40
10.09

10.69
10.66
10.50
10.06

10.69
10.71
10.38
9.88

10.45
10.54
10.33
9.85

10.46
10.53
10.43
9.67

5.200

INTEREST RATES-VARIABLE
Average Rate (Percent)
Ratio
Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

1998
Apr. 1
10.45
10.52
10.42
9.8

STATISTICAL

RELEASE

CROPLAND-DRYLAND

Rural Real Estate Values
April 1, 1998

Region
1

Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
3 Not adjusted for inflation.
n.r. -Not reported due to insufficient responses.
2

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

Eleventh Federal Reserve District

121

602

3.3

5.9

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

111
14
15
8
10
9
20
3
8
11
4

601
264
344
320
695
591
954
572
895
829
433

3.7
- 4.4
0.0
2.8
25.7
7.9
9.1
- 7.2
3.5
-0.3
-9.8

6.7
-4.4
2.9
7.5
76.4
17.7
22.4
-20.0
-10.1
6.4
-11.0

560

1.7

9.6

6
4

660
241

-0.8
2.8

-2.2
5.6

CROPLAND-IRRIGATED

12
MEXICO

Region

1 Northern High Plains
2 Southern High Plains

3
4
5
6
7

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

Percent Changes"
in Values from
Previous Previous
Quarter
Year

DISTRICT

Northern Louisiana
Southern New Mexico

NEW

Average
Value2
Banks'
First-Quarter 1998

Coastal Texas
10 South Texas
11 Trans-Pecos and Edwards Plateau
12 Southern New Mexico

13 Northern Louisiana

Average
Value2
Banks'
First-Quarter 1998

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

841

7.8

14.5

63
13
15
6
7
5
n.r.
n.r.
n.r.
n.r.
3

768
755
679
442
694
762
n.r.
n.r.
n.r.
n.r.
639

5.6
10.6
2.8
4.2
3.8
1.1
n.r.
n.r.
n.r.
n.r.
-13.8

14.6
30.9
1.7
6.6
14.5
9.3
n.r.
n.r.
n.r.
n.r.
-10.6

1,040

18.1

10.9

Northern Louisiana
Southern New Mexico

5
9

897
1,545

-1.3
22.4

1.3
17.1

RANCHLAND
Real Eleventh District Land Values
Land values rise in the first quarter, led by an
8 percent increase in irrigated land values.
1992 dollars per acre
1,600
1,400
1,200
1,000
800
600
Dryland

400
200
0

Ranchland

Region

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

130

344

0.7

6.4

117
12
13
8
9
10
20
8
9
10
4

436
157
135
152
230
516
859
693
882
1,135
406

1.6
-2.8
-0.9
0.3
-1.0
8.5
9.9
-5.1
1.6
30.9
-7.0

1.1
-3.2
-6.7
1.5
1.0
16.7
20.2
-4.9
-11.3
115.2
0.4

353

-4.0

13.3

5
8

469
80

2.1
-11.0

6.1
-35.3

Northern Louisiana
Southern New Mexico
'82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98

Average
Value2
Banks'
First-Quarter 1998

STATISTICAL

First-Quarter
Comments

payments both to the bank and to the
equipment dealers.
We found it difficult to approve
some loan requests using 58 cents for
cotton in 1998 but cannot justify using
any higher price. We also expect a
greater expense for boll weevil control
in 1998, based on the mild winter and
warmer spring soil temperature, which
may encourage earlier planting, utilizing the good moisture conditions we
now have.
Competition for feed-yard cattle
financing is intense. Many lenders are
offering subprime interest rates on
average-quality cattle-feeding operations.

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

Region I-Northern High Plains
We have excellent wheat prospects, good undergound moisture and
low commodity prices. It's kind of like
being all dressed up with no place to go.
This area has received good rainfall this year and last, which has improved overall farm conditions. The
moisture has reduced irrigation costs
and improved dryland yields. Past
carryover debt has been reduced, and
debt levels are much more manageable . Good underground moisture
gives us optimism for a good 1998
wheat crop, barring adverse weather
such as hailstorms.

Region 2 -Southern High Plains
Low cotton prices and high input
costs have resulted in some borrowers
being unable to repay all of the 1997
operating lines. Lack of an organized
boll weevil control program could
result in excessive cost to control the
pest in 1998, and this could put some
cotton farmers out of business. Many
cotton farmers are going to plant
peanuts as an alternative crop this
year, and this is hurting the nonquota
peanut contract prices the shellers are
willing to offer. This will be a critical
year for many of our farm customers.
In 1997 many farmers found out
that making their projected production
and operating within the projected
expense levels of past years were not
enough to offset the low cotton price
of 54 cents to 58.5 cents . Most were
able to pay their operating loan but
were unable to make their equipment

RELEASE

Cattle prices are good for stockers,
pastures are doing very well with good
grazing conditions and tanks are full ,
so it looks like '98 will be a good year
fo r the cattle industry.
We have some concern over low
crop prices at harvesttime.

Region 7-EastTexas

Moisture conditions are excellent.
Old-timers are unable to recall a time
when conditions were better than they
are now. The wheat crop could be a
bumper crop.

Northeast Texas dairy producers
are currently enjoying excellent margins and have guarded expectations
for near-term stability. However, herd
numbers are depleted due to events of
the past two and a half years. Stocker
cattle prices remain firm deeper into
the spring than future/ fat cattle prices
would indicate probable. Thanks to El
Nino, pastures are excellent, sustaining
prices. Contract growing of poultry is
slower than typical due to weak meat
prices, reflecting the flood of pork
suppliers into the current market.

Region 5-Cross Timbers

Region 8-Central Texas

Moisture conditions are excellent,
cattle prices are good and prospects
are for a good wheat crop.
There is excellent soil moisture,
with prospects for an above-average
wheat crop.
Agricultural operations are improving. There are good moisture and
growing conditions for most crops.
There has been a small increase in real
estate loan requests to purchase farmland for future retirement locations.

Moisture conditions are good.
Cotton planting is off to a slow start
because of too much rain during the
week's planting starts.
We've had beneficial rains with a
mild winter. Pastures are greening up
nicely. It's a fairly decent cattle market.
However, fat calves are down.

Region 4-Southern Low Plains
,_

Region 6-North Central Texas
Farmers are off to a very good start
as far as the planting season goes.
Acreage is about 80 percent corn, 10
percent milo and 10 percent cotton in
our county in 1998. Crops are planted,
and we have good moisture conditions
at this time. There is great concern
about marketing the '98 crops. The
current market looks very bleak at this
time. It w ill be a weather-driven market
from here out.

Region 11-Trans-Pecos and
Edwards Plateau
Irrigated farmland values have
shown a tremendous increase in sales
p rice , with most sales to out-of-area
individua ls speculating on the sale of
water to nonagricultural entities.

Region 12-Southern New Mexico
There was good soil moisture in
March. Wheat crop looks very good at
this stage.
El Nino has brought excellent
moisture to the area, which has greatly
benefited area ranchers and farmers.

Full text of Agricultural Survey : First Quarter 1998

FRASER