Full text of Agricultural Survey : First Quarter 2002

View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

STATISTICAL RELEASE

F E D

A L

R E S E R V E

D A L L A S

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

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

Demand for Loans
Twenty-five percent of responding banks
experience lower demand for loans.
Percent
100

First Quarter 2002
60

The First Quarter Survey of Agricultural
Credit Conditions confirmed that chronic problems still beset the Eleventh District agricultural
community. Producers reported an ongoing
inability to reach a break-even point without
government assistance. Deliberations on the new
farm bill caused uncertainty among agricultural
stakeholders, while revenue streams continued
to take a hit because of low commodity prices.
Despite strong spring rains, the entire region
remains in drought. An increased percentage of
those surveyed reported declining loan demand,
Quarterly Survey of
but low interest rates have spurred an increase
in
refinancing of existing loans. (See page 4 for
Agricultural Credit
bankers' comments.)
Conditions is compiled from
Here are additional details from the survey:
• Irrigated land and ranchland values in the
a survey of Eleventh District
first quarter of 2002 both rose relative to the
agricultural bankers. This
fourth quarter of 2001 , increasing 2.4 percent
and 1.7 percent, respectively. Dryland values,
publication is prepared by
however, declined 0.9 percent over the same
the Federal Reserve Bank
period.
• Twenty-five percent of those surveyed
of Dallas and is available
experienced lesser loan demand relative to a
without charge by writing
year ago , compared with 17 percent in first
2001. Additionally, relative to a year ago,
quarter
to the Research Departme nt,
25 percent or more of respondents expect volFedera l Reserve Bank of
ume for non-real estate, feeder cattle , operating,
farm
machinery and farm real estate loans to
Dallas, P.O. Box 655906,
decline in the next tl1ree months.
Dallas, TX 75265-5906,
• Over 30 percent of respondents in the
Northern
High Plains, Southern Low Plains,
or by telephoning
Southern New Mexico and Northern Louisiana
(214) 922-5254. It is
regions reported increases in collateral requirements
relative to a year ago. The average for the
available on the web at
District overall was 26 percent, up from 22 perwww.dallasfed.org.
cent in the fourth quarter of 2001.
• The mean number of farm and ranch borrowers for District banks was 103, down slightly
For questions regarding
from 105 a year earlier. Banks' cost of funds
dipped to 2.92 percent, down from 3.23 percent
informatio n in the re lease,
the prior quarter. Between January and March,
contact John Thompson,
no bank rejected a loan application on the basis
of
funding shortages.
(214) 922-51 91.

0
01 :'96

01 :'97

01 :'98
Less

01 :'99
•

Same

01 :'00
•

01 :'01

01 :' 0~

01 :'01

01 :'02

01 :'01

01 :'02

Greater

Funds Available for Add itional Lendi ng
Seventy-two percent of banks have
the same funding availability as last year.
Percent
100

0
01:'96

01 :'97

01 :'98
Less

0 1:'99
Same

01 :'00
•

Greater

Rate of Loan Repayment
Twenty-four percent of respondents
experience lower loan repayment rates.
Percent
100

01 :'97

01:'98
Less

01 :'99
Same

01 :'00
•

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 bank contacts have
the same number of renewals and extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
60

Percent
----------------~ 70

60
20

50
0
01 :'96

01 :'97

01 :'98

Less

01 :'99

Same

01:'00

•

01 :'01

01 :'02

Actual Ratio

Greater

Amount of Collateral
Twenty-six percent of respondents
report increased collateral requirements.

Desired Ratio

40
2001 :1

2001 :2

2001 :3

2001 :4

2002:1

Percent
100

DISTRIBUTION OF LOAN - DEPOSIT RATIOS

Banks Reporting (Percent)
60

Ratio

Apr. 1

2001
J ul. 1

Oct. 1

21
16
21
19
23

18
15
24
16
28

14
12
24
26
23

Apr. 1

2001
JuJ. 1

Oct. 1

10.29
10.36
10.14
9.53

9.65
9.65
9.51
9.04

9.15
9.16
9.18
8.52

Apr. 1

2001
J ul. 1

Oct. 1

9.98
10.15
9.93
9.32

8.83
9.08
8.96
8.53

8.26
8.48
8.37
7.94

2002
Apr. 1
Jan. 1

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

0
01 :'96

01 :'97

01 :'98

Less

01 :'99

Same

01 :'00

•

01 :'01

01 :'02

21
15
21
21
22

20
17
16
22
26

INTEREST RATE-FIXED

Greater

Total Agricultural Loans at
Eleventh District Banks
Loan volume ticks up after
declining for three straight quarters.
Millions of dollars (seasonally adjusted)
5,600
5,400

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

2002
April 1
Jan. 1
8.32
8.38
8.45
7.98

8.23
8.30
8.23
7.99

5,200
5,000

INTEREST RATE-VARIABLE

4,800
4,600

Average Rate (Percent)

4,400

Ratio

4,200
4,000
3,800
3 , 600-+-~~~~~~-~-----~~~~

'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01

Note: Some of the volatility observed in agricultural loan levels is due
to the acquisition of several Eleventh District banks by banks
headquartered in other Reserve Districts.

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

2002
Jan. 1
Apr. 1
7.29
7.43
7.27
7.00

7.23
7.34
7.29
7.08

STATISTICAL RELEASE

CROPLAND-ORY LANO

...... Real Estate V8lues
April 1, 2002

Region

' 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

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

eeventh Federal Reserve District

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

154

601

- 0.9

- 3.0

TEXAS
Northern High Plains
Southern High Plains
Nor thern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

141
15
20
8
13
14
19
9
17
10
5

596
287
366
329
402
598
848
754
944
780
620

- 1.2
-0.1
2.6
0
- 0.7
-2.4
- 5.5
- 1.0
2.4
-0.4
-1.9

- 3.9
4. 1
7.4
-1.7
- 0.5
3.9
- 13.1
15.1
- 14.2
- 9.7
10.6

526

0.4

- 11.6

Northern Louisiana
Southern New Mexico

11
2

707
251

2.7
-2.0

7.5
- 0.8

CROPLAND-IRRIGATED

12
NEW

Average
Value'
Banks'
First Quarter 2002

MEX I CO

Region

DISTRICT

1 Northern High Plains
2 Southern High Plains
3 Northern Low Plains
4 Southern Low Plains
5 Cross Timbers
6 North Central Texas
7 East Texas

10
11
12
13

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

Average
Value'
Banks'
First Quarter 2002

P ercent Changes 3
in Values from
Previous Previous
Quarter
Year

105

760

2.4

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

91
14
19
8
9
5
n.r.
6
10
6
4

725
607
687
509
660
912
n.r.
980
1,474
812
859

2.6
2.9
2.7
- 2.4
0.3
- 3.3
n.r.
7.3
- 1.3
10.3
-2.3

2.0
1.4
2.6
4.5
- 3.8
0.1
0.2
n.r.
23.4
- 11.2
-3.4
-2.3

981

9.2

13.4

Northern Louisiana
Southern New Mexico

10
4

900
1,053

1.8
1.2

3.4
5.8

RANCHLAND
Region

Eleventh District Real Land Values

Average
Value'
Banks'
First Quarter 2002

P ercent Changes3
in Values from
Previous Previous
Quarter
Year

Irrigated land and ranch/and values rise,
but dry/and values decline.

DISTRICT

165

408

1.7

-2.1

1992 dollars per acre

TEXAS

1,600

No_rthern 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

152
14
13
8
12
16
23
17
19
8
5

512
192
169
205
303
651
816
885
1,016
734
611

1.3
0.5
3.7
3.3
0.6
-0.7
-4.0
2.0
2.4
2.0
0

- 2.2
-0.7
16.4
2.7
9.4
8.7
-10.5
11.0
- 7.2
3.2
- 5.3

433

3.5

- 4.2

9
4

794
106

2.0
7.2

3.1
-1.8

1.400
1,200

1,000
800
600

.... ....

400

Northern Louisiana
Southern New Mexico

Ranch land

200
0

Oryland

'82

'84

'86

'88

'90

'92

'94

'96

'98

'00

'02

STATISTICAL RELEASE

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

Region 1-Northern High Plains

modity prices or a government safety net.
Government payments were real important to profits in 2001.
Ranchland and farmland are being bought
by hunters or attorneys at above-market prices.
Several large ranches have been purchased by
out-of-state buyers and taken out of livestock
production to be used for hunting only.
Most wheat will be grazed out. Cattle
gains have been exceptional due to the moderate winter and amount of grazing. We still
are short of moisture.

Local optimism has improved somewhat
due to [increased] dairy activity. Cattle prices
saw slight improvement, which should help
margins. Rain is desperately needed. Low
interest rates increased requests for equipment
and land refinancing. It is almost impossible to
show positive cash flows for 2002 without the
still unknown additional government payment.
We are still in drought. Grains are in the
tank.

Rain is needed. Most wheat will be
grazed or baled. Cattle prices are still good.
The four-year drought continues, and
stock tanks are low (some are dry). The warm
weather has spring grass coming up, but at
least 1 to 2 inches of rain is still needed for
grazing to start. Wheat is there but not growing because of drought.

Region 2-Southem High Plains

Region 6-North Central Texas

Government assistance is needed to pay
2001 operating expenses. Many farmers in this
area are without operating loans for 2002 ,
with heavy reliance on the FSA for assistance
to continue farming. The situation is getting
desperate to hopeless for many farmers.
The drought continues here in West
Texas, and the mother cow numbers continue
to decline due to lack of graze. Sheep and
goats have virtually disappeared due to predators. Nonresident ownership is prevalent.
Hunting lease income is becoming more
important to the economic sustainability of
[area] ranches. Loan demand in the agricultural
sector has declined across the board. Rainfall
will bring back agricultural loan demand, but
some demand is probably gone forever.

Most cropland was never planted last
year. This year grain was planted earlier than
normal and has suffered from cold weather
and lack of rainfall. The two most important
factors are nonfarm income and government
program payments.
It has been a relatively dry winter in
Central Texas, and we need a good rain to get
spring kicked off.
Residential growth has taken or is taking
our land out of farm production.
No known sales since the last survey.

Region 5-Cross Timbers

Drought conditions are second only to
Congress' failure to pass a meaningful farm
bill as producers' greatest problem.

We have very few agricultural loans, and
most are for tractors and cows.
Drought conditions and 9/11 slowed
demand for beef and contributed to losses in
fourth quarter 2001 and first quarter 2002.
Credit quality is being monitored very closely,
particularly on stocker and feeder cattle operations.
My ag customers are awa iting the new
farm bill in o rder to plan their future. It is
very important that we get this information
soon, but we realize that we don't want to
rush a bill that will not be good for us.
Agricultural conditions are bleak. [There's]
not much fu ture in agriculture.

Region 10-South Texas

Region 3-Northern Low Plains

Region 9-Coastal Texas

Region 7 - East Texas
[We are] waiting on crop insurance proceeds and need moisture. A new farm bill
must be in place this year for family farms to
continue. Commodity prices are inadequate for
the cost of production. Land values are excessive when compared with production. Without
increased commodity prices or government
program payments, or both, available credit
will become more restricted.

We need rain.
Land values are being pushed [up] strictly
by recreational demand.
Hunting continues to be the driving force
behind ranchland [values]. Changes in the current peanut progra m will likely have a large
impact o n the local agricultural community
and may have a substantial impact on the
value of irrigated cropland.
It is extremely dry. A lot of fields are not
planted that would normally be planted by
now due to a lack of moisture. Many irrigated
farms do not have irrigation water, and some
irrigation districts have been put on watch.
Sugar cane harvest is about to wrap up.
Overall, it looks like another pretty good year
for sugar cane producers. Cabbage is finished
and was about a break-even deal. The onion
harvest is just starting, and prices are decent.
Disease and insect problems have been few,
which he lped keep costs down. Early orange
production and prices were good- better than
last year. The grapefruit harvest is still going
on due to better packouts and may continue
into May or June; grapefruit prices have also
been good. Land values continue to hold,
particularly farmland o n the urban fringes.
Ranches for recreation close in to town command premium prices.

Region 4-Southem Low Plains
Region 8-Central Texas
Our lakes need runoff; most are at 10 to
30 percent of capacity.
Drought and depressed commodity prices
equate to failure for farmers, ranchers and
rural communities.
All of our farmers have their life vests on.
Unfortunately, the vests only have one more
year of useful life without an increase in com-

The biggest risk in agribusiness is the
weather. Karnes County is in a 20-year
drought, interrupted by an occasional flood.
Farmers are not making any changes or
purchases until there is more evidence of a
new farm program.

Region 11-Trans-Pecos and
Edwards Plateau

Land transactions are being d riven by
recreational and investment potential.
Production value, especially due to continued
drought, does not exist.
Our stock farming and ranching operations are barely able to pay the interest on
their loans.

SPECIAL

F E D E R A L

REPORT

R E S E R V E

DALLAS

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

Most Important Agricultural Commodities in Eleventh District
(Reported by Responding Banks, First Quarter 2002)

-Rank No.1

RankNo.2

All Regions

RankNo.3

Region 1-Northern High Plains

Number of banks

160

140

120

100

80
60
40
20
Cattle

Cotton

Com

Hay

Wheat Sorghum Peanuts Poultry Dairy

Sheep

Rice Soybeans

Region 2-Southern High Plains

Region 3-Northern Low Plains

Number of banks

12
10

Cotton

Cattle

Peanuts

Sorghum

Hay

Melons

Region 4-Southern Low Plains

Region 5-Cross Timbers

Number of banks

12
10

..................... ..

SPECIAL

F E D E R A L

REPORT

R E S E R V E

Most Important Agricultural Commodities in Eleventh District
(Reported by Responding Banks, First Quarter 2002)-continued
-Rank No. 1

RankNo. 2

Region 6-North Central Texas

RankNo.3

Region 7-East Texas

Number of banks

14
20

12
10

Hay

Poultry

Dairy

Region 9-Coastal Texas

Region 8-Central Texas
Number of banks

Number of banks

12
10

Region 11-Trans-Pecos and Edwards Plateau

Region 10-South Texas
Number of banks

Cattle

Number of banks

Vegetables

Fruits

Melons

Potatoes

Sorghum

Region 13-Northern Louisiana

Region 12-Southern New Mexico
Number of banks

Number of banks

Full text of Agricultural Survey : First Quarter 2002

FRASER