Full text of Agricultural Survey : First Quarter 2014

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

First Quarter 2014

DALLASFED

Agricultural
Survey

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

Survey
Highlights

B

ankers responding to the firstquarter survey continued to
report negative effects from
drought and serious need for rain districtwide. The winter wheat crop was
in poor shape, and wheat for grazing
was minimal, according to respondents
in a number of regions. Cattle prices
remained high, and there were fewer
reports of herd thinning than in past reports. This quarter, some contacts noted
possible lending and cash flow issues
due to uncertainty from the farm bill and
government agricultural programs.
District farmland values continued
rising in the first quarter. Farmland
values for all land types were above
year-ago levels. Ranchland and dryland
values increased almost 5 percent over
last year, while irrigated cropland was up
about 4 percent compared with last year.
Respondents expect farmland values
to continue rising next quarter. Credit
standards continued to tighten this quarter, although the vast majority of respondents noted no change in standards.
Demand for agricultural loans was
flat this period, reversing a more than
five-year decreasing trend. However,
loan renewals and extensions continued to decline. Loan repayment rates
increased again this quarter. Volumes
for most types of loans continued to
decrease. The exceptions were operating
loans and crop storage loans, for which
demand was higher than during first
quarter last year.

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

Percent reporting, Q1

2013:Q4

2014:Q1

pGreater

Same

qLess

Demand for loans*

–3.6

0.2

18.8

62.6

18.6

Availability of funds*

27.0

23.2

26.8

69.6

3.6

6.1

1.9

13.7

74.5

11.8

–6.1

–0.6

9.3

80.8

9.9

Rate of loan repayment
Loan renewals or extensions
Index
50

Availability of funds*

40
30

Rate of loan repayment

20
10
0
–10
–20

Loan renewals
or extensions

–30
Demand for loans*

–40
–50

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

What changes occurred in the volume of farm loans made by your bank in the past three months
compared with a year earlier?
Index

Percent reporting, Q1

2013:Q4

2014:Q1

pGreater

Same

qLess

Non-real-estate farm loans

–1.4

–0.6

18.5

62.4

19.1

Feeder cattle loans*

–3.7

–7.9

11.2

69.7

19.1

–14.0

–8.9

1.2

88.7

10.1

–4.3

1.5

9.4

82.7

7.9

0.0

12.7

24.2

64.3

11.5

Farm machinery loans*

–12.1

–12.6

6.3

74.8

18.9

Farm real estate loans*

–6.1

–9.8

10.9

68.4

20.7

Dairy loans*
Crop storage loans*
Operating loans

*Seasonally adjusted.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate
an increase, while negative index readings generally indicate a decrease.

} Quarterly Comments
District bankers were asked for additional comments concerning
agricultural land values and credit conditions. These comments
have been edited for publication.
Region 1 • Northern High Plains

XXWe remain in a drought. Winter wheat grazing

has been limited, and wheat for harvest is in poor
condition. Farm cash flows are much tighter for
2014, with lower grain prices and elimination
of Farm Service Agency direct payments. Highly
leveraged farming operations will struggle with
cash flow in 2014 based upon current expenses
and projected commodity prices.

XXLand prices appear stable at this time with

demand somewhat lower, apparently due to
lower corn prices—presently around $4.75 per
bushel. The Farm Credit System continues to
compete aggressively for both our customer base
and employees. These are not major changes
since last quarter.
Region 2 • Southern High Plains

XXFavorable weather and rain would really help
as we approach planting season. Water tables
continue to decline, and we could eventually
be looking at only dryland crops if the current
drought continues. Another year of dry conditions could put a lot of farmers out of business,
and that would not be good for our area or our
country.

XXDrought conditions have caused most cattle-

men to thin herds, but with current pricing, they
are trying to rebuild. Crop prices have declined,
so most farmers will be planting with the intentions of another year relying on insurance and
spending less money on crop input.

XXDemand for farmland is still vigorous, even

after three years of drought and declining crop
prices. There are not many properties on the
market on the South Plains. Reasonably priced
properties have been selling quickly.
Region 3 • Northern Low Plains

XXIt is difficult to convey the severity of the
drought. We will continue to see herd liquidations and excessive pumping of our underground
water if significant moisture does not arrive.
XXGinning of the 2013 cotton crop is winding
down. Wheat pasture is short—we need rain.
Projected cash flow for 2014 is marginal without
government payments. Not knowing the par-

12
N E W

M E X I C O

ticulars of the government program is hindering
renewals somewhat.

XXIt is very dry. Wheat crops look bad, and we are
running out of water for cattle and drinking water.
Cattle and wheat prices are good, but we have
very little to sell.

Regions of the Eleventh
Federal Reserve District

Region 4 • Southern Low Plains

XXThere is a lack of Farm Service Agency information on the 2014 farm bill and the Average
Crop Revenue Election program. It is not clear
where we are as a lender.
Region 5 • Cross Timbers

XXDrought conditions have persisted. Rainfall
during the first quarter has been less than
normal.
XXFarmers are beginning to get crop land ready.
Small grains need rain.

XXWe are seeing a few sales on land a little

higher than in the past couple of years. It is getting very dry—there has been little measurable
rain in the last three months. Winter grazing has
been disappointing on grains. Dairies are doing
somewhat better, with higher milk prices. Beef
cattle prices are still very high. We had a very
cold winter, but we still seem to have adequate
hay supplies.

XXIt is extremely dry. There is very little wheat

pasture grazing, and stock tank water is critical
with most stock tanks from dry to 20 percent of
capacity at best.
Region 6 • North Central Texas

XXThere appears to be a shortage of cows in

the area, making for a shortage of calves on the
market.

XXThe producers are in dire need of soaking rain.
There are no known recent sales of agricultural
land.

Region 8 • Central Texas

XXCorn plantings have been delayed due to

cold weather and lack of rain for the area. Hay
supplies remain adequate; with most quality
hay gone, ranchers are feeding secondary hay
reserves to cattle at this time. Calf prices keep
going up, with cows and bulls over $1.00 per
pound and still rising. Most everyone is waiting
to see what the spring brings before making
any big purchases at this time of cattle or new
hay equipment. Oil and gas activity is still going
strong in the area.

XXCattle prices remain high compared with last
year.

Region 9 • Coastal Texas

XXThe overall health of the agriculture sector is

linked to the price of commodities. For the next
two to three years, the grain markets appear to
be lower than the previous three years, which
may cause cash flow deficits for farmers who
carry sizable capital debt service obligations.
Additional uncertainty comes from the new farm
bill, which is unclear to the farmer at this time.
Ranching continues to be promising with cattle
markets holding value.
Region 11 • Trans-Pecos and
Edwards Plateau

XXWe list farm and ranch income as increas-

credit standards have become more stringent.

ing for this monitoring cycle due to cattle prices
being up. Ranchers currently have the option of
liquidating old cows for the same price they can
buy back younger bred cows.

XXLocal agricultural loan quality is considered

XXLivestock prices remain at all-time highs. We

Region 7 • East Texas

XXDue in part to a change in bank ownership,
good.

Agricultural Survey • First Quarter 2014 • Federal Reserve Bank of Dallas

are beginning to need rain pretty badly on the
Edwards Plateau. No measurable rain has fallen

Rural Real Estate Values—First Quarter 2014
1
Banks1

3

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

2

4

L O U I S I A N A

5
6

11

7

T E X A S

13

120

1,553

4.8

Texas*
1 Northern High Plains

106
17

1,571
716

4.9
5.5

2 Southern High Plains

12

648

3.7

3 Northern Low Plains*

13

849

10.5

4 Southern Low Plains*

8

9

10

8

858

2.4

5 Cross Timbers

10

1,630

19.5

6 North Central Texas

13

2,331

4.7

7 East Texas*

6

1,930

1.3

8 Central Texas

12

3,171

9.4

9 Coastal Texas

5

2,210

–4.4

n.a.

n.a.

n.a.

9

1,633

6.1

4
10

400
2,050

3.1
4.3

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

in this area in the first couple of months this year.
This brings back frightening memories of 2011.

XXAll livestock markets are favorable, but drought
conditions are serious.

XXCattle, sheep and goat prices are good. We
need rain.

XXContinued dry conditions in recent months
have many area ranchers concerned about the
future. There is good soil moisture 8–10 inches
down from the ground surface from late 2013
moisture, but the higher soil is very dry. There
is still a good deal of old grass, but the quality is
likely getting marginal at present. Many sheep
operators have moved to hair sheep in recent
years, and they have fared much better than
wooled sheep. A bright spot has been consistently good feeder lamb, goat and cattle markets.
Region 12 • Southern New Mexico

XXAppreciable moisture will have to be received
for summer crops to have much of a chance.

XXThe drought continues. It would take many

years of consistent, good moisture in all seasons
to reestablish forage needed for ranchers and
to raise the water table levels. Gentle, soaking
spring rains are needed right now by farmers and
ranchers.

XXWinter has been extremely dry, and early

winds indicate the potential for a difficult spring.
Forage conditions are fair and should help
producers make the summer monsoon season
without substantial herd liquidation. This year is
expected to be a much better irrigation season
than 2013 based on the amount of water in
storage, but without a strong finish to winter with
improved snowpack, reliance will once again be
on the summer monsoon.

13 Northern Louisiana

Cropland—Irrigated
District*

94

2,282

3.7

Texas*
1 Northern High Plains

77

2,150

2.2

17

1,968

4.0

2 Southern High Plains

12

1,381

–7.1

3 Northern Low Plains*

9

1,472

25.0

4 Southern Low Plains

4

1,325

–8.9

5 Cross Timbers

5

2,780

15.5

6 North Central Texas

5

3,800

0.0

7 East Texas

3

1,967

0.0

8 Central Texas

8

3,534

9.8

9 Coastal Texas

4

2,625

6.4

n.a.

n.a.

n.a.

11 Trans-Pecos and Edwards Plateau

9

3,150

5.6

12 Southern New Mexico

7

2,864

7.2

10

2,940

8.7

129
113

1,608
1,921

4.8
4.9
6.7

10 South Texas

13 Northern Louisiana

Ranchland
District*
Texas*
1 Northern High Plains

16

559

2 Southern High Plains

6

617

0.0

3 Northern Low Plains

13

854

10.7

4 Southern Low Plains*

7

969

0.0

5 Cross Timbers
6 North Central Texas

13
14

1,938
2,318

10.4
–1.1

7 East Texas

12

2,221

6.1

8 Central Texas

12

4,146

11.8

9 Coastal Texas
10 South Texas
11 Trans-Pecos and Edwards Plateau

4

2,100

2.7

n.a.

n.a.

n.a.

15

1,863

2.2

12 Southern New Mexico

7

264

1.6

13 Northern Louisiana

9

1,767

0.9

*Seasonally adjusted.
1
Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation and calculated using responses only from those banks reporting in
both the past and current quarter.
n.a.—Not published due to insufficient responses but included in totals for Texas and district.

Agricultural Survey • First Quarter 2014 • Federal Reserve Bank of Dallas

Real Land Values

Real Cash Rents

2005 dollars per acre
2,200

2005 dollars per acre per year
Irrigated

2,000

2005 dollars per acre per year

60

120
Irrigated

50

1,800
1,600

Ranchland

1,400

40

Dryland

1,200

100
80

Dryland

30

1,000
800

60

20

40

600

Ranchland

400

10

20

200
0

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

All values have been seasonally adjusted.

Anticipated Farmland Values and Credit Standards
Long-term farm real estate

Intermediate term

Other farm operating

0

All values have been seasonally adjusted.

Interest Rates by Loan Type

Feeder cattle

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Fixed (average rate, percent)

What trend in farmland values do you expect in your area in the next three months?
Index
Anticipated trend in farmland
values*

6.43

6.53

6.30

6.12

Q2

6.21

6.39

6.22

6.01

Q3

6.16

6.34

6.25

6.04

2014:Q1

pUp

Stable

qDown

8.6

10.5

14.6

81.3

4.1

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
Credit standards

2013:Q1

Percent reporting, Q1

2013:Q4

2013:Q4

2014:Q1

pTightened

Same

qLoosened

9.5

9.2

10.4

88.3

1.2

Index
50

Q4

6.16

6.27

6.17

5.86

2014:Q1

6.19

6.30

6.14

5.89

40
30

Credit standards †

20
10
0

Anticipated trend
in farmland values*

–10

Variable (average rate, percent)

–20

2013:Q1

5.87

5.98

5.84

5.57

Q2

5.81

5.94

5.80

5.47

Q3

5.71

5.81

5.71

5.47

–50

Q4

5.69

5.75

5.71

5.42

*Seasonally adjusted.
†Added to survey in second quarter 2011.

2014:Q1

5.78

5.84

5.77

5.43

NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

–30

DALLASFED

–40
2010

2011

2012

2013

2014

Agricultural Survey
is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally
adjusted as necessary. Data were collected March 4–12, and 163 bankers responded to the survey.
This publication is prepared by the Federal Reserve Bank of Dallas and is available without charge by
sending an email to pubsorder@dal.frb.org or by calling 214-922-5254. It is available on the web at
www.dallasfed.org/research/agsurvey.
For questions, contact Amy Jordan, 214–922–5178.
Agricultural Survey • First Quarter 2014 • Federal Reserve Bank of Dallas