Full text of Agricultural Survey : Fourth Quarter 1997

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STATISTICAL

F E D E R A, L

R E S E R V E

RELEASE
B A N

D A L L A S

Agricultural Credit Conditions at
Survey Banks in the Beventh District

Quarterly Survey of
·cultural
Credit Conditions in the
Eleventh Federal Reserve District

Demand for Loans
Sixty percent of responding banks
report no change in the demand for loans.
Percent
100

Fourth Quarter 1997

40
The Fourth Quarter Survey of Agricultural
Credit Conditions indicates that Eleventh
20
District agricultural producers continue to
recover from the drought, although there are
0
some signs of weakening in late 1997. While
01 :'91
01 :'92
01 :'93
01 :'94
01 :'95
01:'96
01 :'97
respondents report favorable weather
Less
• Same
• Greater
conditions for much of the District, their
attention is increasingly focused on market
Funds Available for Additional Lending
conditions. Bankers report that although cotton Seventy-four percent of respondents report
yields have been good, many cotton producers no change in the availability of fun ds for lending.
Percent
are feeling the sting of low prices. As govern100
ment subsidies are phased out, producers are
being encouraged to market their crops to
80
Quarterly Suroey of
hedge against price volatility. However,
bankers indicate that some cotton producers
Agricultu ral Credit
60
saw contracts broken when market prices fell
Conditions is compiled from
as much as 20 percent below contracted price
40
a survey of Eleventh District
levels (see bankers' comments on page 4).
There is also a slight increase in reports of
agricultural bankers. This
20
declines in loan repayment rates and increases
publication is prepared by
in renewals and extensions compared with the
0
the Federal Rese rve Bank
third quarter.
01 :'91
01 :'92
01 :'93
01 :'94
01 :'95
01 :'96
01 :'97
Here are additional details from the survey:
of Dallas and is available
Less
• same
• Greater
• Sixty-two percent of responding bankers
without charge by writing
report no change in the rate of loan repayment
Rate of Loan Repayment
compared with year-earlier levels . A decline in
to the Research Department,
The rate of loan repayment decreases for
the rate of loan repayment is reported by
Federal Reserve Bank of
2 1 percent of fourth-quarter respondents.
slightly more bankers than in the third quarter.
Percent
Dallas, P.O . Box 655906,
Forty-four percent of bankers in the Southern
100
High Plains report declines in the rate of loan
Dallas, TX 75265- 5906,
repayment compared w ith a year earlier.
80
o r by telephoning
• Twenty-one percent of District bankers
report increased loan renewals or extensions,
(21 4) 922-5254.
60
up from 15 percent in the third quarter. However, 65 percent of bankers report no change in 40
For questio ns regarding
the amount of renewals and extensions. At least
·
25 percent of bankers in the Southern High
information in the release,
20
Plains, Coastal Texas, Trans-Pecos and Edwards
contact Sheila Dolmas,
Plateau, Southern New Mexico and Northern
0

(214) 922-5191.

01 :'91

(Continued on page 4)

....

01 :'92

01 :'93

01 :'94

Less

• Same

01 :'95

01 :'96

• Greater

01 :'97

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Sixty-five percent of respondents report
the same number of renewals or extensions.
Percent
100

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

Percent
~~~~~~~~~~~~~~~-

60
40

45
0
01 :'91

Actual Ratio
01 :'92

01 :'93
Less

01 :'94

01 :'95

• Same

01:'96

01 :'97

• Greater

35
Desired Ratio

1996:4

1997:1

1997:2

1997:3

1997:4

Amount of Collateral
Seventeen percent of survey respondents
report an increase in collateral requirements.
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS
80

Banks Reporting (Percent)
60

Ratio

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

0
01 :'91

01 :'92

01 :'93

01 :'94

Less

01 :'95

Same

0 1:'96

Jan. 1

34
20
23
18
6

1997
Apr. 1
Jul. 1

29
27
20
15
9

24
22
23
17
15

Oct. 1

1998
J an. 1

21
18
20
25
15

30
16
25
20
10

INTEREST RATES-FIXED

01 :'97

• Greater

Average Rate (Percent)

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending levels off in the third quarter of
1997 after rebounding strongly in the second quarter.
Millions of dollars (seasonally adjusted)

Ratio

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

J an. 1

19 97
Apr. 1
Jul. 1

Oct. 1

1998
Jan. 1

10.48
10.56
10.41
9.90

10.46
10.56
10.37
10.05

10.47
10.56
10.39
9.71

10.49
10.60
10.33
9.74

10.55
10.68
10.48
9.95

5,000

INTEREST RATES-VARIABLE

4,800

Average Rate (Percent)

4,600

4 ,400

Ratio

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

4,200

4,000

'86

'87

'88

'89

'90

'91

'92

'93

'94

'95

'96

'97

J an . 1

19 9 7
---Apr. 1
Jul. 1
Oct. 1

1998
J an. 1

10.32
10.53
10.33
10.02

10.42
10.53
10.40
10.09

10.50
10.55
10.30
9.90

10.69
10.66
10.50
10.06

10.69
10.71
10.38
9.88

STATISTICAL

RELEASE

CROPLAND-DRYLAND

Rural Real Elbd8 January 1, 1998

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.
1

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

Eleventh Federal Reserve District

122

560

-.4

-.6

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

113
14
15
8
11
12
15
4
13
7
4

556
281
348
310
412
522
810
605
882
817
492

-.3
.1
1.3
2.4
-3.1
2.2
2.2
-8.1
.6
1.6
-1.5

-.3
-1.0
7.5
4.6
10.8
6.8
5.2
-13.1
-13.8
3.9
6.3

522

-2.5

6.0

653
n.r.

-.9
n.r.

-3.8
n.r.

n.r.

CROPLAND-IRRIGATED

12
MEXICO

Region

I 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

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISfRICT

Northern Louisiana
Southern New Mexico

Nl!W

Average
Value2
Banks'
Fourth-Quarter1997

Central Texas
Coastal Texas
South Texas
Trans-Pecos and Edwards Plateau
12 Southern New Mexico
13 Northern Louisiana
8
9
10
11

Average
Value"
Banks'
Fourth-Quarter 1997

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISfRICT

739

- .5

3.3

66
14
14
4
7
6
n.r.
3
6
n.r.
3

688
618
654
438
767
n.r.
706
1,342
n.r.
804

1.5
3.1
-.4
5.6
0
1.0
n.r.
13.9
.8
n.r.
4.2

2.3
6.4
.2
-.3
12.6
13.2
n.r.
5.0

723

-8.7

-20.3

Northern Louisiana
Southern New Mexico

7
5

923
1,167

1.8
-11.5

2.2
9.6

666

-M
n.r.
13.4

RANCHLAND

Region

Real Eleventh District Land Values
Land values remain relatively stable.
1992 dollars per acre
1,600
1,400

1,200
1,000
800

600

,, .......
,,,

~-----

400
200
0

Ranchland

---

Dry land

-----

Percent Changes 3
in Values from
Previous Previous
Quarter
Year

DISfRICT

129

328

1.8

-.7

118
11
13
8
10
12
15
11
15
5
5

411
158
137
148
237
440
716
739
831
583
444

1.8
-2.5
-.7
-.6
1.2
.6
.1
.4
-4.5
6.0
-.1

2.4
-5.7
-5.1
-1.8
1.5
-.7
-17.2
2.8
16.6

370

6.7

9.6

5
6

454
88

.8
1.5

4.1
-29.2

Northern Louisiana
Southern New Mexico
~UMUMW~~~~-m~••w

Average
Value2
Banks'
Fourth-Quarter 1997

.4
.4

STATISTICAL

Fourth-Quarter
Comments

RELEASE

This area finally received adequate
moisture. However, wheat pastures are
growing slowly due to unfavorable soil
temperature.

Region 7-EastTexas

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

Region 2-Southern High Plains
Cotton prices are now below 60
cents per pound for our grade of cotton.
Most break-even points are at 63 cents
to 65 cents. Most cotton yields were
right at or slightly below expectations.
The depressed cotton market is
having a devastating effect on many
producers. Several of our farm-operating
borrowers will experience operating
carryover due to the low cotton prices,
despite above-average yields. Producers
must do a better job of marketing their
crops to hedge against price declines in
the future.

Region 4-Southern Low Plains
For the second year in a row, the
cotton farmers have seen tl1eir cotton
contracts default. This year it could
affect the county by $1 million to $1.25
million in lost revenue. Most cotton was
contracted for 70 cents to 71.5 cents per
pound. Today's market is around 55
cents per pound. Wheat outlooks are
good for grazing. Wheat price to harvest
is projected to be $3 per bushel.

·-

Dairy margins are excellent in
this, the peak season for production.
Producers await events of early
consolidation of dairy cooperatives
Associated Milk Producers Inc. and Mid
America Dairymen Inc. with some
anxiety. Stocker calf prices are excellent,
and winter planting of pasture is good.
Poultry grow-out operations are
experiencing extended periods of idle
capacity, although some of it is seasonal.

Region 8-Central Texas
The peanut harvest was disappointing due to wet and cold conditions.
Moisture conditions are good for
spring. Fe1tilizer is being applied at this
time.

Region 9-Coastal Texas
In our area , input costs are high.
Fanners cannot afford to scrimp on costs
witl1out significantly reducing yields.
Cost-saving measures such as no-till or
other sin1ilar management practices will
not work here due to our rainfall, soil
types and climate. It is getting increasingly difficult to generate a profit due to
the rising cost of inputs and machinery.
Our community is predominantly
agriculture based, and some small
businesses have suffered and gone out
of business over the past several years
due to the slim margins in fanning.

Region 5-Cross Tunbers

Soil moisture is good, and small
grains are growing well. Dairy producers are very concerned about future
milk prices. Some dairy producers are
selling their cattle and trying to sell
their dairy farms.

Region 12-Southern New Mexico
The start of winter has been very
rough as a result of the snow and cold
temperatures.

Additional Details Continued
(Continued from page 1)

Louisiana regions report increases in
loan renewals or extensions compared
with a year earlier.
• Although producers in Southern
New Mexico have been hurt by winter
storms in the last part of December,
there is no evidence yet tlrnt credit
conditions have deteriorated in that
region. Seventy-one percent of bankers
report stable rates of loan repayment
and no changes in the amount of loan
renewals and extensions compared
with a year earlier. Most bankers in
that region expect stable loan demand
in the first quarter of 1998.
• Fifty-six percent of Southern
High Plains respondents expect an
increase in the volume of non-real
estate farm loans, compared with a
year earlier, during the first quarter
of 1998, while 57 percent of Northern
Louisiana respondents expect a
decrease.
• About one-fourth of all District
bankers and one-half of East Texa
and Cross Timbers bankers expect a
decrease in the volume of dairy loans
during the first quarter of 1998, compared with the the first quarter of 1997.
• Fifty-seven percent of responding bankers want to increase the
volume of loans available to farmers
and ranchers .
• Real District ranchland va lues
were 1.8 percent higher in the fourth
quarter, while irrigated land values fe ll
0.5 percent and dryland values continued to edge down for the third consecutive quarter. Irrigated land values
finished the year 3.3 percent above
1996 values, but ranchland and dryland values fell slightly. Most respondents expect land values to be stable
in the first quarter of 1998, but at least
one-fourth of responding banks in the
Cross Timbers, North Central Texas,
Trans-Pecos and Edwards Plateau , and
Southern New Mexico regions expect
land values to rise .

Full text of Agricultural Survey : Fourth Quarter 1997

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