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First Quarter 2015

DALLASFED

Agricultural
Survey

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

Survey
Highlights

ankers responding to the firstquarter survey reported receiving
beneficial winter rain and snow
but said more moisture is needed. Farm
commodity prices remained low, and
there was widespread concern among
respondents about debt and profitability this year. The winter wheat crop is
in generally good condition, while the
livestock sector remains strong. However,
high cattle prices are restraining herd
replacement.
Changes in district farmland values
were mixed in the first quarter. Bankers
in a couple of regions noted that land
purchases for nonagricultural purposes
had impacted land values. Real irrigated
cropland and dryland values declined
from fourth-quarter levels but remained
above year-ago levels. Ranchland values
increased modestly.
Responses suggest bankers anticipate farmland values will decline next
quarter, a reversal of a three-year trend
in this index. The credit standards index
indicated continued tightening, although
the vast majority of respondents noted
no change in standards.
Demand for agricultural loans
picked up again, marking the third consecutive quarter of increasing demand
after six years of declines. While volumes
for a majority of loan types continued
to decrease, operating loan volumes
increased. Loan repayment rates slowed,
and loan renewals and extensions were
generally unchanged from the previous
quarter.

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

2014:Q4

2015:Q1

pGreater

Same

qLess

6.2

8.3

24.9

58.6

16.6

21.9

21.0

22.2

76.6

1.2

2.2

–3.2

12.7

71.4

15.9

–4.4

0.8

10.3

80.2

9.5

Demand for loans*
Availability of funds*
Rate of loan repayment
Loan renewals or extensions
Index
50

Availability of funds*

40
30

Rate of loan repayment

20
10
0
–10
Loan renewals
or extensions

–20
–30

Demand for loans*

–40
–50

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

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

2014:Q4

2015:Q1

pGreater

Same

qLess

–0.7

0.8

21.3

58.3

20.5

5.8

0.0

16.0

68.0

16.0

–11.5

–10.2

2.4

85.0

12.6

Crop storage loans*

2.1

–4.3

8.4

78.9

12.7

Operating loans

8.2

5.9

20.2

65.6

14.3

Farm machinery loans*

–21.0

–16.5

9.1

65.3

25.6

Farm real estate loans*

–12.5

–17.7

8.3

65.7

26.0

Non-real-estate farm loans
Feeder cattle loans*
Dairy 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

XXMoisture improved with winter snow storms.
Prospects for producing an average to above-average
wheat crop look good. Lower profitability is reflected in
2015 farm budgets due to lower crop prices.

XXWe are definitely feeling a burden from additional
bank regulations, which are causing great hardship on
our banks and our customers.

Region 2 • Southern High Plains

XXCommodity prices really hurt our crop producers.
Only cattle prices stayed at a decent level. Current
moisture is a big positive for planting. Farmers are having a hard time deciding what to plant and how to use
new insurance products from the 2014 farm bill.

Region 4 • Southern Low Plains

XXWe lost a large amount of feeder cattle loans due to
market volatility, specifically the cash-basis volatility,
making breakeven projection impossible. Wheat is in
such good shape that our bank could have made some
good loans if our producers had a reliable hedging tool.

XXWe are going into spring with adequate ground
moisture but inadequate tank, pond and lake water.

XXMoisture conditions are very good at present, but

XXIn the current farm bill and new insurance pro-

XXWe received much-needed moisture in the past

XX2014 was a very tough year for farmers in our
area. Lower commodity prices are making cash
flows extremely tight. The new farm bill is of no help
to our producers, especially cotton producers. We
are leaning more and more on Farm Service Agency
loans; however, their limits are not adequate in some
circumstances.

XXAs expected, West Texas row-crop producers
experienced poor to mediocre results in 2014. Cotton
growers who harvested a crop fared the worst as cotton prices fell to the 50 cent range at harvest, which is
well below production costs. Many will have carryover
debt. For the most part, producers have enough land
equity to refinance the carryovers. The cattle sector is
also facing pressure from falling stocker and feeder
prices. The one bright spot is much-improved moisture
conditions, which should give us a shot at a reasonable
crop for the first time since 2010. With depressed crop
prices, growers are understandably cautious about
spending. Equipment and other farm supply dealers
are reporting lackluster demand. Farmland values
haven’t backed off any, which is somewhat surprising.

Region 3 • Northern Low Plains

10 days in the form of rain, sleet and snow. However,
lakes and stock tanks remain below 25 percent
capacity.

Region 6 • North Central Texas

XXWe have concerns for 2015 crop income because of
the drop in expected commodity market prices.

XXMost land transactions we are seeing are sales to
investors and not to farmers or ranchers directly. Farmers and ranchers in our area are generally leasing the
majority of the acreage they operate.

Region 7 • East Texas

XXThe cattle market remains strong. We are watching
how much we loan on cattle but have a very good borrower base, which tends to be conservative.

XXA corporation’s recent nonagricultural-purpose land
purchase of prime irrigated farmland was for almost
double normal sales prices. The sellers now have funds
to buy other parcels at inflated prices. This transaction
will skew farmland prices in the area for several years.

XXIt is a desire and focus of our bank for 2015 to grow
agricultural lending; however, competition from other
types of lenders is proving problematic economically.

XXProducers are feeling the impact of lower commod- XXWe have experienced an increase in past-due loans
ity prices. Most can pay all operating costs but cannot

Regions of the Eleventh
Federal Reserve District

Region 5 • Cross Timbers

huge factor in the lower profitability of most operations
in 2014. Lack of a direct payment program for most
commodities and lower insurance prices will make
2015 challenging. Current moisture conditions are the
bright spot in a tight year to come.
grams, cotton is the forgotten commodity. Cash flows
are extremely tight, and producers are being stretched.

M E X I C O

make term debt payments. Moisture conditions are fair.
The wheat crop is in fair to good condition at this time.

most of our area is still in dire need of heavier rains to
bring up lake levels. Hay supplies are adequate and the
price is holding; winter pasture grazing is good. Record
beef cattle prices are giving cow–calf operators a
boost, especially those not having to buy replacements.
Dairies in the area had a good 2014, which continues
into 2015 with very good milk prices and reasonable
feed costs.

XXHarvest commodity prices and weather played a

12
N E W

and a slight decrease in the price of pastureland in the

Agricultural Survey • First Quarter 2015 • Federal Reserve Bank of Dallas

past six months. Poultry growers have made additional
requests for operating loans due to increased operating costs to heat their poultry houses.

Region 8 • Central Texas

XXDrilling activity in the Eagle Ford Shale region has
slowed down, and we are seeing some people lose
jobs. Overall, borrowers are doing well. Ranchers are
pleased that cattle prices remain high. Many ranchers
are retaining quality replacement heifers to replace
older cows. Rains over the past few days are better
than we have had in years. Many fields were renovated
and/or planted, so they are ready to be fertilized in
anticipation of ample hay and corn crops in 2015.

XXWinter weather is holding back row-crop planting
in the area. We still have not had enough rain to fill
up ponds and reservoirs; we still need deep moisture
for the summer months. Cattle futures prices are
declining, yet cash cattle prices have been increasing.
Replacement cattle are setting new highs every time
there is a replacement sale.

XXThe strong cattle market is very welcome to
our producers; however, the high cost for purchasing replacement cows is putting a damper on herd
enlargement.

Region 9 • Coastal Texas

XXAgricultural values in the area are stable to slightly
higher, but there’s still some influence from nonfarmrelated purchases by investors or recreational users.
Overall, rainfall has been good to above average,
with some areas receiving excess rain, which slowed
fieldwork and plantings. Crop income projections
are stable. Farm bill enrollment is very slow and has
hindered producers’ program decision-making. Equipment debts incurred last year pose some cash-flow
concerns, while new equipment purchases have also
been noted and should be of concern. Cattle prices

Rural Real Estate Values—First Quarter 2015
1
Banks1

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

L O U I S I A N A

5
6

T E X A S

107

1,633

5.5

Texas*
1 Northern High Plains

90
14

1,642
793

5.2
7.0

2 Southern High Plains

690

2.0

3 Northern Low Plains*

827

1.7

4 Southern Low Plains*

909

5.1

5 Cross Timbers

1,420

1.4

2,288

–1.5

7 East Texas*

2,579

5.5

8 Central Texas

3,379

8.5

9 Coastal Texas

2,357

8.6

6 North Central Texas

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

n.a.

1,080

11.3

4
13

425
2,442

3.8
10.5

Cropland—Irrigated
have dipped slightly but are still very good. Feeder
cattle are slow into the feedlot as most producers are
still trying to restock. Wheat in fields right now has
the potential to yield a record crop. All other crops
have potential for average to above-average if no
other delays in planting occur.

XXAll farmers are feeling a compression in margins
due to very low commodity prices. Debt-service
obligations will become a focus point in underwriting
agricultural loans for the next two years. Farmers who
carry minimal debt will have a significant operating
advantage.

Region 11 • Trans-Pecos and
Edwards Plateau

XXMany irrigated acres are enrolled in the Edwards
Aquifer Authority’s Voluntary Irrigation Suspension Program, resulting in less cotton and corn to be planted
on the farms.

XXWinter on the Edwards Plateau has been cold and

District*

2,343

3.8

Texas*
1 Northern High Plains

2,115

1.6

2,123

8.3

2 Southern High Plains

1,633

7.7

3 Northern Low Plains*

1,592

0.0

4 Southern Low Plains

1,350

7.7

n.a.

6 North Central Texas

2,500

0.0

7 East Texas

2,575

5.0

8 Central Texas

3,750

2.2

9 Coastal Texas

2,920

1.0

n.a.

11 Trans-Pecos and Edwards Plateau

1,125

5.8

12 Southern New Mexico

3,617

19.0

3,255

0.5

119
102

1,604
1,903

3.7
3.0

5 Cross Timbers

10 South Texas

13 Northern Louisiana

Ranchland
District*
Texas*
1 Northern High Plains

625

11.4

icy, which is hard on livestock. Even though we have
had more than the normal wintry mix of snow, sleet
and ice, we still have not received substantial rainfall or
beneficial moisture amounts. No real improvement has
been made to the water table or deep soil moisture.
Commodity prices remain strong in all areas.

2 Southern High Plains

650

1.5

3 Northern Low Plains

892

1.9

4 Southern Low Plains*

1,131

4.4

5 Cross Timbers
6 North Central Texas

7
17

1,707
2,394

1.7
5.1

XXCattle, sheep and goat prices remain good.

7 East Texas

2,533

2.2

8 Central Texas

4,400

5.8

9 Coastal Texas

2,150

0.0

n.a.

1,627

2.6

316

25.5

1,921

6.2

Region 12 • Southern New Mexico

XX2015 farm operations have begun. Winter moisture
across the region has been spotty. Range conditions
should be good this spring. There remains considerable inventory of striped hay in the valley. Farmers
are currently negotiating 2015 alfalfa prices with the
dairies.

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

*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 2015 • Federal Reserve Bank of Dallas

Real Land Values

Real Cash Rents
2005 dollars per acre per year

2005 dollars per acre
2,200

Irrigated

2005 dollars per acre per year

120
Irrigated

2,000
50

1,800
1,600

Ranchland

1,400
1,200

Dryland

1,000

100

800

600

Ranchland

400

200
0

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

NOTE: All values have been seasonally adjusted.

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

Intermediate term

Other farm operating

Feeder cattle

Interest Rates by Loan Type

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

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*

6.19

6.30

6.14

5.89

6.12

6.19

6.05

5.79

6.12

6.22

6.00

5.80

2015:Q1

pUp

Stable

qDown

6.0

–1.4

8.5

81.6

9.9

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

2014:Q1

Percent reporting, Q1

2014:Q4

2015:Q1

pTightened

Same

qLoosened

8.8

7.8

9.3

89.2

1.6

Index
50

6.03

6.14

5.96

5.77

2015:Q1

6.09

6.12

6.01

5.74

40
30

Anticipated trend
in farmland values*

Credit standards †

10
0
–10

Variable (average rate, percent)

–20

2014:Q1

5.78

5.84

5.77

5.43

5.73

5.75

5.64

5.30

5.69

5.75

5.64

5.37

–50

5.65

5.71

5.62

5.39

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

2015:Q1

5.56

5.66

5.54

5.26

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
2011

2012

2013

2014

2015

Agricultural Survey
is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally
adjusted as necessary. Data were collected March 3–11, and 138 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 214-922-5270. It is available on the web at
www.dallasfed.org/research/agsurvey.
For questions, contact Amy Jordan, 214–922–5178.
Agricultural Survey • First Quarter 2015 • Federal Reserve Bank of Dallas

Full text of Agricultural Survey : First Quarter 2015

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