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First Quarter 2018

DALLASFED

Agricultural
Survey

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

Survey
Highlights

B

Figure 1

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?

ankers responding to the first-quarter

Index

survey noted conditions remained dry
across a number of regions. Winter

wheat conditions declined as a result. Lack of
moisture limited pasture grazing of cattle in
some regions. More cotton acres are expected
this year in a couple regions.
Demand for agricultural loans overall continued to decrease for a tenth consecutive quarter.
Loan renewals and extensions accelerated,
while the rate of loan repayment declined after
stabilizing last quarter. Overall, the volume of
non-real-estate farm loans was in line with a year
ago, but the volume of farm real estate loans declined. The volume of operating loans continued
to increase, and crop storage loans increased in
the first quarter for the first time in three years.

2017:Q4

2018:Q1

pGreater

Same

qLess

Demand for loans*

–4.6

–4.3

13.5

68.7

17.8

Availability of funds*

14.6

14.1

16.2

81.7

2.1

Rate of loan repayment

–0.8

–10.6

6.2

77.0

16.8

2.4

15.3

17.1

81.1

1.8

Loan renewals or extensions
Index
50

20
10
0
-10

decline in the first quarter (Figure 1).

-30

values decreased (Figure 2). According to bankers who responded in both this quarter and first
quarter 2017, nominal dryland and ranchland
values increased year over year in Texas (Table 1).

Loan renewals
or extensions

30

-20

values increased this quarter, while ranchland

Availability of funds*

40

Volumes of other loan categories continued to
District real dryland and irrigated cropland

Percent reporting, Q1

Rate of loan repayment

Demand for loans*

-40
-50
2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

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

Southern New Mexico respondents indicated

Percent reporting, Q1

2017:Q4

2018:Q1

pGreater

Same

qLess

Non-real-estate farm loans

–2.4

0.0

12.4

75.2

12.4

spondents reported cropland and ranchland

Feeder cattle loans*

–1.9

–13.2

7.3

72.2

20.5

values all increased.

Dairy loans*

–12.5

–14.1

1.9

82.1

16.0

–2.3

2.9

11.1

80.7

8.2

3.3

7.8

16.5

74.8

8.7

Farm machinery loans*

–15.1

–9.6

8.9

72.6

18.5

Farm real estate loans*

–10.0

–3.5

9.6

77.3

13.1

cropland values increased while ranchland
values decreased, and northern Louisiana re-

The anticipated trend in the farmland values
index remained positive for a fourth consecutive
quarter, suggesting respondents expect farmland values to trend up in the upcoming months.
The credit standards index indicated continued
tightening of standards on net (Figure 4).

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 need rain.
Region 2 • Southern High Plains

XXDrought is hurting our ag customers, and we are
approaching the critical stage. Good, slow, soaking
rain would help tremendously. I am happy to see
positive movement for seed cotton to provide a safety
net for our cotton farmers.

XXWe have had an increased number of carryover

loans due to the quality of the cotton crop. We have
started off the year extremely dry, and the forecast
is not favorable.

Oct. 1. Pasture and wheat conditions are poor. Very little dryland farm prep has been started. Irrigated producers are watering their cover crops to get a stand.

XXOur county is in extreme drought and has been

XXThe last several months have been extremely dry.
The majority of wheat pasture cattle were moved to
grow yards. We were finally blessed with some good
moisture. All pastures are recovering nicely.

Region 4 • Southern Low Plains
expensive crop with no net revenue. Drought conditions are having a negative impact on livestock and
wheat operations. Moisture is a great concern this
year. Possible trade negotiations will directly impact
agriculture, which could be good and bad.

Region 5 • Cross Timbers

XXIt has been an easier renewal season. Most row- XXRecent rains make for a brighter outlook after six
crop borrowers have either paid out or will once their
cotton is ginned. There have been some exceptions
stemming either from short crops due to early storm
losses or from low cotton-fiber quality. Better cotton
prices have helped. The recently announced ginning
assistance support program will help as well. Stocker
cattle have been challenged by poor wheat pasture
for grazing. Cattle feeding margins have bounced
back, at least for a while. Those who can will plant
cotton instead of grain this year. If it doesn’t start
raining, it won’t matter. Cotton insurance guarantees
are decent at $0.85 including seed.

Region 3 • Northern Low Plains

XXWashington politics is creating very unstable mar-

ket conditions. There are some pricing opportunities
in cotton and livestock, but grains are still too low for
much opportunity. Drought conditions continue to be
the driving factor in planning and budgeting this year.
If conditions persist, there will be fewer producers
next year.

XXCurrent drought conditions have everyone con-

cerned. There has been no significant moisture since

M E X I C O

Regions of the Eleventh
Federal Reserve District

since September. Winter wheat is poor, and there is
no stocker grazing to speak of. About half the wheat
has not even come up yet. Stock ponds are drying up
and grass is short. Without substantial rain soon, producers will be forced to downsize cow herds again.

XXOur area is extremely dry. There has been no mea- XXWe had good cotton production, but it was a very
surable rainfall for well over 100 days. Dry weather
has caused winter wheat to struggle; therefore,
winter cattle grazing has been cut extremely short
with cattle being sold or transferred to grow yards.
This is extremely expensive and not cost effective
at this point. All farm operating renewals have been
extremely tight with some producers having a carryover balance from the 2017 crop year.

12
N E W

months of very dry conditions.

Region 6 • North Central Texas

XXIn the last week of February, our area got 12 to

17 inches of rain. We will have to see how it affects
spring hay and crops.

Region 7 • East Texas

XXCorn

planting is in full swing. Cotton acreage
across the area is expected to be 10 to 15 percent
higher. Cold and dry conditions until recently hampered winter grazing prospects. As a result, hay inventories are virtually depleted. A late and extended
cold period could be costly.

Region 8 • Central Texas

XXOil field activity has slowly returned to our area,
with several mergers and sellouts being noted, as
well as new drilling and leasing in some areas. Rural
land with wildlife is still selling the best, with a slow-

Agricultural Survey • First Quarter 2018 • Federal Reserve Bank of Dallas

down in commercial loan requests. Ranchers are
watching the pricing on spring calves to determine
how bullish or bearish they will be this spring in buying cattle. The biggest single factor for all of the agriculture in our area will be rain in the coming months.
Most people have run through old hay supplies and
are anxious to start making new hay and to see green
grass again. The rains we had were helpful, but more
is needed in the coming months and summertime.
Little or no corn has been planted yet due to wet field
conditions. The cold winter should help the fruit trees
and the fall pecan harvest if rains continue through
the spring and summer.

XXWe have ample moisture going into spring. Winter

grasses and grains are looking good for grazing and
haying later in the season.

Region 9 • Coastal Texas

XXLand with the agricultural property tax exemption

is generally selling for an average of $3,000 an acre.
Smaller tracts (under a 100 acres) sell for more, and
larger tracts generally sell for less. Additionally, properties with greater recreational value sell for more
per acre. In general, land is not being valued using
agricultural production as the primary valuation metric. Recreational usage is a significant factor.

Region 11 • Trans-Pecos and
Edwards Plateau

XXRanchers are having to bear higher feed costs as
ranchland is extremely dry.

XXLivestock prices are good across the board. Future

expectations continue to be driven by rainfall. Some
areas recently received generous rainfall, but some
areas continue to be shorted. Like most years, this is
when moisture is expected, but if it does not rain in a
general pattern over the Edwards Plateau in the next
couple of months, many operators will be faced with

Table 1

Rural Real Estate Values—First Quarter 2018

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

8

9

10

13

95

1,928

9.1

Texas*
1 Northern High Plains

81
7

1,957
1,025

9.2
0.9

2 Southern High Plains

9

756

11.8

3 Northern Low Plains*

7

915

5.7

4 Southern Low Plains*

7

1,185

6.6

5 Cross Timbers

5

1,550

20.5

6 North Central Texas

15

2,870

7.9

7 East Texas*

4

2,889

6.7

8 Central Texas

10

3,730

6.3

9 Coastal Texas

7

2,543

16.0

10 South Texas

4

2,350

8.7

11 Trans-Pecos and Edwards Plateau

6

2,283

16.7

12 Southern New Mexico

6
8

425
2,519

14.3
7.1

13 Northern Louisiana

some difficult decisions with hot summer approaching. If rainfall rates are normal or above, this could be
a very good year for our area with prices the way they
are. Predators continue to be a major hurdle for sheep
and goat operations as more and more places are
sold off and taken out of production. Most new owners are not terribly concerned with predator control
because it is not apparent to them on a daily basis
how costly the problem is. However, when the deer
herds begin to dwindle due to hogs, bobcats, foxes
and coyotes, the issue will become more of a general
concern to all landowners.

XXRainfall overall has been scattered and light in

relation to what is needed. Dry conditions are or
will become critical if good rainfall is not received
soon. Sheep and goat markets are very good, with
cattle markets being reasonable based on historic
prices. Predators remain a huge, increasing problem
for sheep and goat producers and continue to drive
many more to cattle, when the country is more suited
to sheep and goats. The number of wild hogs continues to be high, and efforts to control them and other
predators remain very important.

Region 12 • Southern New Mexico

XXWe have extremely dry conditions over our lending

area. Dryland wheat will likely be a complete loss this
year. Livestock sale prices have remained steady to
better, and lots of livestock continue to come to market as dry range conditions persist.

XXConditions

are very dry with no foreseeable
change in weather patterns. The pecan harvest was
very good with production approaching 4,000 pounds
per acre. Cattle are coming off of alfalfa and forage
pasture with preparations for the 2018 farm season.
Commodity prices have improved slightly; however,
they still remain somewhat compressed.

XXNo measurable precipitation for five months is

concerning, which impacts irrigated farmers’ expenses and negatively impacts dryland yields as well.

Cropland—Irrigated
District*

69

2,596

2.0

Texas*
1 Northern High Plains

54

2,385

–0.3

7

2,243

–1.4

2 Southern High Plains

9

1,735

–6.3

3 Northern Low Plains*

4

2,532

12.3

4 Southern Low Plains

5

1,600

13.5

n.a.

n.a.

n.a.

6 North Central Texas

4

2,938

18.5

7 East Texas

3

3,300

9.1

8 Central Texas

6

3,992

7.2

9 Coastal Texas

6

3,083

0.0

10 South Texas

4

2,925

6.5

11 Trans-Pecos and Edwards Plateau

4

3,963

–1.4

12 Southern New Mexico

7

3,607

8.0

13 Northern Louisiana

8

3,625

10.4

108
93

1,757
2,089

3.8
4.5
–5.9

5 Cross Timbers

Ranchland
District*
Texas*
1 Northern High Plains

7

721

2 Southern High Plains

7

671

5.2

3 Northern Low Plains

6

992

17.3

4 Southern Low Plains*

7

1,138

–12.4

5 Cross Timbers
6 North Central Texas

6
16

1,742
2,991

–0.7
11.6

7 East Texas

11

2,891

8.2

8 Central Texas

11

5,595

8.2

9 Coastal Texas

6

2,717

–3.2
10.0

10 South Texas

4

2,575

12

1,629

–1.2

12 Southern New Mexico

6

321

–12.1

13 Northern Louisiana

9

2,172

10.2

11 Trans-Pecos and Edwards Plateau

*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 2018 • Federal Reserve Bank of Dallas

Figure 2

Figure 3

2017 dollars per acre
Irrigated
2,600
2,400
2,200
2,000
Dryland
1,800
1,600
Ranchland
1,400
1,200
1,000
800
600
400
200
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2017 dollars per acre per
60

NOTE: All values have been seasonally adjusted. Real values are created by
deflating the nominal values using the implicit price deflator for U.S. gross
domestic product.

NOTE: All values have been seasonally adjusted. Real values are created by
deflating the nominal values using the implicit price deflator for U.S. gross
domestic product.

Real Land Values

Real Cash Rents

Table 2

2017 dollars per acre per year
140
Irrigated

120

50

100

40

80

Dryland

30

60
20

Ranchland

40

10
0

20

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

0

Figure 4
Anticipated Farmland Values and Credit Standards

Interest Rates by Loan Type
Long-term farm real estate

Intermediate term

Other farm operating

Feeder cattle

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

6.19

6.24

6.21

5.95

Q2

6.05

6.17

6.05

5.89

Q3

6.17

6.30

6.24

5.93

Q4

6.24

6.29

6.25

5.99

2018:Q1

6.41

6.51

6.28

6.10

2018:Q1

pUp

Stable

qDown

7.1

1.6

7.4

86.8

5.8

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
2017:Q4

2018:Q1

pTightened

Same

qLoosened

12.1

15.5

15.5

84.5

0.0

Credit standards

Fixed (average rate, percent)
2017:Q1

Index
50

40

Credit standards †

30
20
10
0
-10
-20

Variable (average rate, percent)

Anticipated trend
in farmland values*

-30

2017:Q1

5.73

5.74

5.80

5.47

Q2

5.75

5.81

5.74

5.47

Q3

5.92

5.96

5.95

5.64

Q4

5.91

5.93

5.97

5.65

2018:Q1

6.18

6.17

Percent reporting, Q1

2017:Q4

6.04

5.75

DALLASFED

-40
-50

2011

2012

2013

2014

2015

2016

2017

2018

*Seasonally adjusted.
†

Added to survey in second quarter 2011.

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.

Agricultural Survey
Agricultural Survey is compiled from a survey of Eleventh District agricultural bankers, and data
have been seasonally adjusted as necessary. Data were collected March 13–21, and 118 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/surveys/agsurvey.aspx, where you may sign up
for free email alerts to be automatically notified as soon as the latest survey is released on the web.
For questions, contact Emily Kerr, 214–922–6941.
Agricultural Survey • First Quarter 2018 • Federal Reserve Bank of Dallas