Full text of Agricultural Survey : First Quarter 2011

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Ag r i c u lt u r a l S u rv e y

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

Demand for Loans
Demand for loans increases for the first time since 2008.

First Quarter 2011

Index
100
80
60
40
20
0
–20
–40
–60
–80
–100

2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011

Funds Available for Additional Lending
The availability of funds index reaches a 10-year high.
Index
100
80
60
40

Bankers responding to the first-quarter survey noted improved
farm lending trends in the Eleventh District, although there is much
concern about widespread drought conditions. Several reports indicated that dry weather was hurting wheat crops and limiting grazing
for cattle. Comments from bankers noted increases in commodity
prices and very strong prices for livestock, particularly cattle. Respondents in several regions voiced concern over rising input costs,
including fuel, fertilizer and feed.
Ranchland values held steady while dry and irrigated cropland
values increased slightly from last quarter. Expectations for farmland
values rose, with 22 percent of bankers anticipating an increase over
the next three months. Respondents in select regions continued to
report land sales for nonagricultural purposes.
Solid crop yields and strong commodity prices in 2010 led to
an improvement in lending conditions in the district. Loan demand
and repayment rates increased in the first quarter, and requests for
loan renewals or extensions fell markedly. Loan volume expectations
were mixed, although the index for farm real estate loans moved
into positive territory for the first time since mid-2007. The availability of funds index reached a 10-year high, suggesting banks may be
looking to increase their agricultural loan portfolios.

20
0

Farm Lending Trends and Forecasts

–20
–40

What changes occurred in non-real-estate farm loans at your bank in the past three
months compared with a year earlier?

–60
–80
–100

2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011

Rate of Loan Repayment
Loan repayment rates increase for the second consecutive quarter.

Demand for loans
Availability of funds
Rate of loan repayment
Loan renewals or extensions
Change in collateral required

2011:Q1
Index
4.87
43.89
12.96
–19.24
5.72

Greater
26.59
45.85
20.71
4.66
6.70

Same
51.68
52.19
71.54
71.44
92.32

Less
21.73
1.96
7.75
23.90
0.98

2010:Q4
Index
0.31
31.07
9.87
–7.73
7.37

Index

How do you expect the volume of farm loans made by your bank during the next three
months to compare with the volume of loans made during the same months a year ago?

100
80
60
40
20

Non-real-estate farm loans
Feeder cattle loans
Dairy loans
Crop storage loans
Operating loans
Farm machinery loans
Farm real estate loans

0
–20
–40
–60
–80
–100

2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011:Q1
Index
–4.43
0.41
–13.75
–13.42
5.44
2.01
2.73

Greater
15.49
17.15
0.00
2.74
19.65
16.95
16.58

Same
64.60
66.12
86.25
81.09
66.13
68.11
69.57

Less
19.92
16.73
13.75
16.17
14.21
14.94
13.85

2010:Q4
Index
–1.38
–3.67
–15.12
–3.34
6.11
2.47
–9.05

2011

Survey responses are used to calculate an index for each question by subtracting the percentage reporting a decrease from the
percentage reporting an increase. When all respondents report
increased activity, an index will register 100. An index will register
–100 when all respondents report a decrease. An index will be zero
when the number of respondents reporting an increase or decrease
is equal.

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 of Dallas and is available without charge by sending
an e-mail to pubsorder@dal.frb.org, or by calling 214-922-5254. It is available on the web
at www.dallasfed.org.
Data may not match previously published numbers due to data revisions.
For questions regarding information in the release, contact Emily Kerr, 214-922-6941.

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

Renewals or Extensions of Loans
Twenty-four percent of bankers note a decrease in requests for
loan renewals or extensions.

Percent
75

Desired Ratio

Actual Ratio

70
65

Index

100

2010:Q1

2010:Q3

2010:Q2

2011:Q1

2010:Q4

–20

Distribution of Loan-to-Deposit Ratios

–40
–60

Banks reporting (percent)

–80
–100

2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011

Amount of Collateral
The great majority of respondents note no change in collateral
requirements.
Index

2011

Apr.1

Jul. 1

Oct.1

Jan. 1

Apr.1

24
11
13
21
31

22
11
14
23
30

23
10
14
25
29

18
18
20
17
26

26
21
12
20
20

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

Interest Rates
Fixed

100
80

Average rate (percent)

2010

40
20

Jul. 1

Oct.1

Jan. 1

Apr.1

6.81
7.07
7.15
6.75

6.78
6.89
7.10
6.69

6.83
6.96
7.02
6.71

6.66
6.86
6.84
6.52

6.52
6.77
6.80
6.51

5.91
6.22
6.21
5.94

6.05
6.24
6.29
5.99

5.94
6.24
6.14
5.80

5.96
6.16
6.13
5.91

6.14
6.30
6.13
5.74

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

0
–20
–40
–60

2011

Apr.1

–80
–100

2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011

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

Anticipated Trend in Farmland Values
More respondents expect farmland values to continue their
upward trend over the next three months.
Index

Total Agricultural Loans
Agricultural loan volumes dipped in fourth quarter.

100
80

Millions of dollars (seasonally adjusted)

8,600

8,200

7,800

7,400
7,000

–20

6,600

–40

6,200

–60

5,800

–80
–100

5,400
2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011

5,000
4,600
4,200
3,800

Ag r i c u lt u r a l S u rv e y

2000

First Quarter 2011

2001

2002

2003

2004

2005

2006

2007

2008

2009

Federal Reserve Bank of Dallas

2010

Rural Real Estate Values — March 2011
Cropland—Dryland

Eleventh Federal Reserve District

Banks1

Average
value2

First quarter 2011
3
12
N E W

M E X I C O

L O U I S I A N A

T E X A S

Real Cash Rents
Cash rents rise for irrigated land and dryland in the first quarter.

1
2
3
4
5
6
7
8
9
10
11
12
13

Irrigated

80
70
60
50
40

Dryland

30
20

Ranchland

10
0

2001

2002

2003

2004 2005

2006

2007 2008

2009

2010

2011

District

109

1,401

1.1

9.1

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
Southern New Mexico
Northern Louisiana

95
17
11
7
10
9
12
4
12
3
n.a.
9
5
9

1,401
515
531
674
803
1,215
2,277
2,041
2,922
1,061
n.a.
1,233
363
1,526

0.9
1.5
–0.1
–0.1
–0.1
–1.7
6.5
–4.5
3.7
–6.8
n.a.
–1.5
–3.9
2.8

8.8
6.4
12.4
12.5
–2.8
–6.4
13.1
17.0
11.2
–13.3
n.a.
12.6
–5.9
12.7

1,569

0.6

10.4

68
17
11
5
8
4
n.a.
n.a.
7
n.a.
n.a.
9
7
8

1,514
1,326
1,129
1,520
1,220
2,083
n.a.
n.a.
2,962
n.a.
n.a.
3,015
1,944
2,052

0.6
4.6
0.3
8.0
1.8
–2.7
n.a.
n.a.
1.3
n.a.
n.a.
1.1
–0.1
1.1

12.1
17.1
3.9
47.24
3.4
–8.4
n.a.
n.a.
15.6
n.a.
n.a.
36.54
–1.5
20.3

District

123

1,292

0.1

5.7

111
17
10
7
10
10
14
10
14
n.a.
n.a.
16
6
6

1,659
413
411
708
867
1,802
2,315
1,975
3,613
n.a.
n.a.
1,715
243
1,074

0.1
0.9
–0.7
1.9
–1.3
–0.6
2.6
–3.8
4.1
n.a.
n.a.
0.4
0.0
5.0

5.0
4.8
9.1
8.5
–3.9
–3.3
4.6
0.8
7.5
n.a.
n.a.
3.8
–3.2
14.9

Cropland—Irrigated
District

2005 dollars per acre

100

Percent change3
in value from
Previous Previous
quarter
year

1
2
3
4
5
6
7
8
9
10
11
12
13

Ranchland
Real Land Values
Cropland values continue to rise.

1
2
3
4
5
6
7
8
9
10
11
12
13

2005 dollars per acre

1,600
1,400

Irrigated

1,200
1,000
800

Dryland

Ranchland

600
400
200
0

2001

2002

2003

2004

2005

2006 2007

2008 2009

2010

2011

Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation.
4
Significant rise in the percent change from 2010 to 2011 is partly due to
variation in reporters between years.
n.a.—Not published due to insufficient responses but included in totals for
Texas and district.
2

Ag r i c u lt u r a l S u rv e y

First Quarter 2011

Federal Reserve Bank of Dallas

Quarterly Comments
District bankers were asked
for additional comments concerning agricultural land values and
credit conditions. These comments have been edited.
Region 1—Northern High Plains
Dry fall conditions have continued into the spring with no measurable moisture. Harvestable dryland
wheat will be minimal. Irrigated
wheat yields will be decreased.
The moisture profile is weak,
which hurts not only the growing
wheat crop but also will have an
adverse effect on nonirrigated cotton and milo emergence.
Increases in commodity prices
have helped the cash flows of all
agriculture producers. There is concern that such a significant increase
in commodity prices will drive land
prices and equipment prices up.
Region 2—Southern High Plains

payments this year. The rest the
soil may get from not having crops
planted this season will help our land
but will hurt our local economy.
Region 5—Cross Timbers
It is still very dry in all of this
area. Winter grazing is poor, and
prospects are not good for wheat
crops. The area will need good
spring rains, or it could be a bad
summer for hay production and
pastures. Cattle prices are excellent
and milk prices are much better,
but there are big concerns about
fuel, feed and fertilizer costs. Pecan
growers had their best year ever
with good yields and record-high
prices.
Ice and snow in the first part of
February brought needed moisture.
Wheat and winter weeds are growing, but rain is needed for stock tanks
as well as additional growth of plants.
Region 6—North Central Texas
Our region really needs moisture.
Region 8—Central Texas

We need a good, slow rain.
Commodity prices look good for
this year if we can produce the
crops.

Eagle Ford Shale activity in the
area has created an increase in the
asking price of farm and ranch land,
and few tracts are trading for agriculture or recreational purposes. The
Region 3—Northern Low Plains
primary interest in land appears to be
oil and gas interests of the Eagle Ford
Dry weather has resulted in limited wheat grazing. Cattle are being Shale.
Cattle prices continue to be at allmarketed earlier from lack of graztime historic highs, but it is unknown
ing.
how long this can last. Regardless of
Region 4—Southern Low Plains
price, everyone wants rain more than
anything else. If we go into a dry
The cost of fuel and its effect on
summer, it will be rough on agriculthe economy is our biggest concern.
ture lenders. Eagle Ford Shale play
With rising commodity prices
continues to be a huge influence on
and a slower economy, the farmers
our lending area, with a lot of new
are being able to compete with indrilling and leasing.
vestors for the land that is available
The positive for our region is that
for sale.
cattle prices are up. The negatives for
There has been no appreciable
our region are the dry weather, esrainfall in our area since September.
calating fertilizer and fuel prices and
It looks like wheat and cotton farmlow
loan demand.
ers may rely heavily on insurance

Ag r i c u lt u r a l S u rv e y

First Quarter 2011

Region 11—Trans-Pecos and Edwards
Plateau
We are experiencing extremely
dry range conditions and rising
feed costs. The only saving grace is
that livestock prices continue to increase, so if livestock numbers need
to be reduced, ranchers can do so
in an up market.
Ranchland is leasing between $3
and $5 per acre for grassland use,
whereas ranchland hunting lease
prices start at $10 per acre. Edwards
Plateau would not have the amount
of ranchland available if it weren’t
for the hunting lease income; many
people would have to sell their
land. Continued drought conditions
have increased operating costs for
ranchers in the Edward Plateau
area. Feed costs are at all-time
highs as well. There is one bright
spot out there—livestock prices
continue to be strong and demand
for all classes is brisk.
A good, general 3- to 4-inch
slow-soaking rain would ease everyone’s minds (both borrowers
and lenders).
The agriculture real estate market has softened somewhat lately,
with fewer buyers in the picture.

Federal Reserve Bank of Dallas

Full text of Agricultural Survey : First Quarter 2011

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