Full text of Agricultural Survey : Fourth Quarter 1999

View original document

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

STATISTICAL RELEASE

F E D E R A L

R E S E R V E

L A

Agricultural Credn Conditions at
Survey Banks in the Beventh District

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

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

Fourth Quarter 1999

The Fourth Quarter Survey of Agricultural
Credit Conditions suggests some improvement
since the third quarter survey. Most bankers
(57 percent) reported they would like to
increase the volume of loans available to farmers and ranchers, but an increased number of
bankers reported a decline in demand for loans,
Quarterly Survey of
renewals or extensions compared with a year
Agricultural Credit
ago. Many link the reduced demand to drought
Conditions is compiled from conditions that have discouraged farmers from
planting and to government assistance that has
a survey of Eleventh District
helped farmers pay off existing loans. (See page
agricultural bankers . This
4 for bankers' comments.)
Here are additional details from the survey:
publication is prepared by
• Twenty-two percent of the bankers
the Federal Reserve Bank
reported a decline in requests for renewals or
extensions compared with a year ago. This is up
of Dallas and is available
sharply from the 3 percent of bankers who
w ithout charge by writing
reported a decline in the fourth quarter of 1998.
to the Research Department, Only 26 percent of bankers reported an increase
in renewals or extensions in fourth quarter
Federal Rese rve Bank of
1999, compared with 52 percent of bankers who
Dallas, P.O. Box 655906,
reported an increase in fourth quarter 1998.
Dallas, TX 75265- 5906,
or by telepho ning

(214) 922-5254. It is
available on the web at
<www.dallasfed .org>.

For questions regarding
informatio n in the release,
contact Steve Stout, (214)
922-5177.

• Twenty-seven percent of reporting
bankers said demand for loans was below that
of a year earlier. In the Southern Low Plains,
South Texas, New Mexico and Louisiana
regions, over 40 percent reported reduced loan
demand.
• Agricultural land values and cash rents
increased in most regions, with the strongest
increases in areas such as Central and North
Central Texas, South Texas and New Mexico.
Bankers commented that values are being
pushed up by demand for land for nonagricultural purposes, such as recreation or investment.

0
0 1:'93

01:'94

01:'95

Less

0 1:'96

•

Same

01:'97

•

01 :'98

01 :'99

Greater

Funds Available for Additional Lending
Seventy-five percent of respondents report
no change in the availability of funds for lending.
Percent
100

01 :'94

01 :'95

Less

01 :'96

•

Same

0 1:'97

•

01 :'98

01 :'99

Greater

Rate of Loan Repayment
The rate of loan repayment increases for
24 percent of third-quarter respondents.
Percent
100

0
01:'93

0 1:'94

01:'95

Less

01:'96

•

Same

01 :'97

•

01:'98

Greater

0 1:'99

STATISTICAL RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Twenty-two percent of respondents report
decreases in loan renewals or extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
60

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

II
11111
I
I
I

0
m~

Less

•

Same

•

Greater

Amount of Collateral
Seventy-five percent of respondents report no
change in collateral requirements.

II
II

Actual Ratio
Desired Ratio

1998:4

II
11111
I
I
I
1999:1

II
II
I
I
I
1999:2

II
-m
I
I
I
1999:3

55
50
45

35
1999:4

Percent
100

DISTRIBUTION OF LOAN - DEPOSIT RATIOS

Banks Reporting (Percent)
60

Ratio

Jan. 1

1999
Apr. 1
Jul. 1

2000
Oct. 1

Jan. 1

26
22
21
14
17

24
20
26
17
13

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

26
16
27
20

28
19
25
12
16

25
31
19

11
13

0
m~

Less

•

Same

•

INTEREST RATE-FIXED

Greater

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending rebounds in third quarter 1999.
Millions of dollars (seasonally adjusted)
5,200
5.000

Average Rate (Percent)
Ratio

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

J an. 1

9.94
10.08
9.88
9.29

1999
Apr. 1
Jul. 1

9.91
9.99
9.75
9.18

9.99
9.98
9.82
9.28

2000
Oct. I

Jan. I

10.16
10.19
10.10
9.50

10.39
10.46
10.13
9.59

4.800

INTEREST RATE-VARIABLE

4.600

Average Rate (Percent)

4.400
4,200

Ratio

4.000

"86 "87 '88 '89 '90 '91

'92 '93 '94 '95 '96 '97 '98 '99

Note: Starting in May 1998, data previously reported by NationsBank of
Texas in the Eleventh District are reported by Bank of America in the
Fifth District.

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

J an. I

9.78
9.92
9.73
9.19

1999
Apr. I
Jul. I

9.75
9.94
9.73
9.15

9.65
9.84
9.71
9.17

2000
Oct. 1

Jan. 1

10.06
10.17
10.01
9.47

10.20
10.30
10.08
9.63

STATISTICAL RELEASE

CROPLAND-DRY LA ND

..... Real Eltat8 . . .
January 1, 2000

Region
1

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.
2

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

Bevenlh Federal Reserve District

109

584

0.5

2.5

TEXAS

100
11
15
7
12
7
15
3
9
6
6

580
292
321
304
400
569
896
609
1,084
686
521

0.4
1.5
-0.5
- 2.0
1.1
1.4
5.5
-14.8
9.0
- 5.3
5.7

2.4
-5.4
-1.7
-1.2
7.5
3.5
9.5
4.7
-7.2
10.4

562

- 1.5

2.5

6
3

665
342

0.1
16.4

4.6
- 6.9

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

1.1

CROPLAND-IRRIGATED

12
lll l: llCO

Region

1
2
3
4
5
6
7

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

Northern Louisiana
Southern New Mexico

NEW

Average
Banks'
Value'
Fourth Quarter 1999

Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas

8
9
10
11
12
13

Central Texas
Coastal Texas
South Texas
Trans-Pecos and Edwards Plateau
Southern New Mexico
Northern Louisiana

Average
Banks'
Value'
Fourth Quarter 1999

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

750

1.5

- 5.4

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
Nor th Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

66
10
14
6
8
3
n.r.
n.r.
7
3
5

669
531
653
421
660
836
n.r.
n. r.
1,644
709
803

0.5
-6.0
0.2
0.9
1.8
2.2
n.r.
n.r
- 1.5
n.r.
15.4

- 5.5
- 3.1
0.8
1.3
- 2.3
12.2
n.r.
n.r.
- 11.2
-26.3
14.9

921

6.9

- 30.6

Northern Louisiana
Southern New Mexico

5
6

833
1,521

-1.6
8.1

0.8
- 6.3

RANCHLAND

Region

Eleventh District Real Land Values

Average
Value•
Banks'
Fourth Quarter 1999

Percent Changes'
in Values from
Previous Previous
Quarter
Year

Land values recover in the fourth quarter of 1999.

DISTRICT

116

421

10.0

3.5

1992 dollars per acre

TEXAS

1,600

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

104
11
12
7
11
7
17
6
10
5
6

488
173
138
175
243
490
788
758
1,234
510
540

7.7
2.7
-2.5
0.8
2.9
- 2.4
4.5
-5.6
13.9
-1.4
10.l

10.4
- 4.6
2.8
5.8
-9.0
6.9
1.5
17.8
15.2
-9.5
15.l

453

13.3

15.3

5
7

527
226

2.6
26.4

17.1
- 25.9

1,400
1,200

1,000
800
/"

600
400
200
0

....

___________ ,,
Dryland

.... J

Ranch land

-~~••w•••~•m•••m••

Northern Louisiana
Southern New Mexico

STATISTICAL RELEASE

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

Region 1-No rthern HJgh Plains
Crop conditions are very dry. Low
prices are making crop budgets very tight
for next year.
At last, Y2K is out of the way. All we
have to be concerned with now is
increased farm operating costs, low farm
prices, mergers, government farm programs
that are not working, crop insurance that is
insufficient, biotechnology that no one
knows how to handle (for good or bad),
environmental issues, the World Trade
Organization and those who now want to
put storage back on the farm. Can we solve
these issues in the 21st century? We sure
didn't in the 20th.

Regio n 2-Southern HJgh Plains
Cotton and peanut production is less
than projected. The grade and staple of cotton have hurt the loan price. The average
price with loan deficiency payments is
between 53 cents and 58 cents per pound.
We expect carryover to be higher than normal and cash flow operations in 2000 to be
more difficult than usual, based on expected prices. Hot, dry August and September
weather apparently caused a substantial
decrease in the peanut yield.

Regio n 3-Northern Low Plains
Disaster programs saved farmers . They
didn't help ranchers, but it looks like current cattle prices will save them if we don't
have any more severe dryness. Wheat is
nonexistent. There is no submoisture at all.
Real estate values are too high on grassland
because the metro population is coming in
and purchasing land for hunting. This will
come back to haunt some people later.

Region 4-Southern low Plains
Our farmers and ranchers continue to
be plagued by drought and cheap commodity prices. It appears we will collect
insurance on wheat, cotton and milo in
2000. It is vital that the USDA restructure
our crop insurance program, as well as
develop a livestock insurance program. No

one is looking for the ad hoc government
handout; farmers and ranchers just want a
fair price for their products because they
paid a fair price for the inputs to their
products. They would also like a safety net
that protects them against uncontrollable
circumstances, such as declining markets
and adverse weather conditions.
We are experiencing a severe drought
with no relief in sight. Wheat grazing is
below normal, causing stocker cattle loans
to be down 50 percent to 75 percent from
normal. Irrigated farmland is still good as
long as our water holds.
Being in the fourth year of a drought
has greatly enhanced credit problems.

Region S-Cross Timbers
Conditions are very dry, there is no
winter wheat grazing and half the stock
tanks are dry!

Region 6-North Central Texas
1~

None of our land is selling for agricultural purposes, and farm acreage is decreasing rapidly. Agricultural loan demand is
down because farmers are losing land to
developers.
Land values are on a general increase
in the entire Central Texas area, as more
people are escaping from urban sprawl by
going to the countryside. However, we continue to use basically the same values for
land, based on production value. Cash rent
isn't going up on crop- or ranchland. Our
demand for loans is low right now compared with past Decembers for two reasons:
first, the additional government assistance
fa rmers received for 1999, which has
helped them pay back their loans and kept
them from needing to borrow more; and
second, draughty fall and winter conditions,
which have discouraged farmers from planting until they know we will get more rain.
Our farm loans are in excellent condition. All operating loans paid out with loan
deficiency payments, and disaster payments
made good reductions on equipment and
real estate loans. Without disaster payments
we would have had 25 percent to 30 percent of borrowers with carryover.
Farmers are in better shape in this
area, due to a very good crop and government payments. All loans are current and
paid as agreed. It is very dry. Most farmers
are waiting to apply fertilizer and chemicals
to see what the weather will be like closer
to planting time. They have become very
conservative in their spending habits [and
will remain sol until prices for their products increase. Cattle prices are good, but
most ranchers are feeding hay and protein
daily to hang on until rain comes. Tanks
are going dry, and water is becoming a

problem. Some owners have sold down
herds, trying to hang on as long as they
can.

Region 7-East Texas
Milk prices haven't been this low since
1978. Prices fell under $10 per hundred
pounds for November and December. The
new federal price orders take effect
January 1, 2000. Winter pastures need rain.
Beef prices continue to climb. Commodity
prices are still low, with no price rally in
sight. Broiler chicks being placed in contract grower houses appear to be of good
quality.
Calf prices are holding well at this
time. The lack of moisture has hurt winter
pasture. Feed prices are moving up.

Region 8-Central Texas
Recent rainfall lends optimism to the
coming year.
Demand for recreational land is keeping land values strong. While there is talk
of strengthening cattle prices, drought conditions will hinder many ranchers from
pursuing profit. Without substantial rainfall
soon , corn farmers may not be able to
p lant.

Region 10-South Texas
Ranchland values are being pushed up
by recreational users (hunters) far beyond
production value.
Most farmland in this area is fair to
good. Crop yields were average, but an
August storm delayed and deteriorated the
cotton crop. Farmers are increasingly
reliant on disaster and flex payments.
Commodity prices were low due to carryover from the previous year's strong crop.
Cattle prices are up and down, depending
on weather circumstances. The storm
brought needed moisture to pastures, and
late hay crops were harvested. Rain is now
needed for this spring, as late winter has
been very dry. Ranches are being bought
by affluent individuals, some of whom are
still interested in production but want
expenses to write off other income. Real
ranchers are often unpaid consultants.

Region 11-Trans-Pecos and
Edwards Plateau
Drought conditions continue and
many producers are selling out.
All we need is some rain!

Region 12-Southern New Mexico
Conditions are very dry. There has
been little winter moisture to date.

Full text of Agricultural Survey : Fourth Quarter 1999

FRASER