Full text of Agricultural Survey : Fourth Quarter 2002

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STATISTICAL RELEASE

F E D E R A L

R E S E R V E

BANK

DALLAS

Agricunural Credn Condnions at
Survey Banks in the Beventh District

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

Demand for Loans
Twenty-two percent of respondents
report decreased loan demand.
Percent
100

Fourth Quarter 2002
60

The Fourth Quarter Survey of Agricultural
Credit Conditions saw mild improvement in the
Eleventh District's agricultural sector for the second quarter in a row. Fall rains and favorable
growing conditions have significantly helped
producers with crop yields. Respondents have
mixed views on the farm bill, as producers are
still signing up and getting acclimated to the
changes. (See page 4 for bankers' comments.)
Quarterly Survey of
Here are additional details from the survey:
• Overall loan demand seems to have risen
Agricultural Credit
in the last two quarters, but is still weaker than
Conditions is compiled from a year ago. Sixteen percent of respondents
a survey of Eleventh District reported greater loan demand, down from 18
percent in fourth quarter 2001. Increases in loan
agricultural bankers. This
demand have been particularly strong in the
Northern
High Plains and Southern High Plains,
publication is prepared by
with over 25 percent of respondents reporting
the Federal Reserve Bank
increases.
• Ten percent of respondents report a
of Dallas and is available
greater rate of loan repayment compared with a
without charge by writing
year ago, down slightly from 11 percent in
to the Research Department, fourth quarter 2001. By the second quarter of
2002, the percentage of bankers experiencing
Federal Reserve Bank of
increased loan repayment had dropped to
5
percent, but it has been on the rise since then.
Dallas, P.O. Box 655906,
• Twenty-six percent of bankers expect the
Dallas, TX 75265-5906,
volume of feeder cattle loans to be less during
the next three months relative to a year earlier,
or by telephoning
up from the 18 percent who thought so last
(214) 922-5254. It is
year. Wheat pastures were positively affected by
fall rains, making for an improved cattle-raising
available on the web at
environment. Cattle prices are recovering and on
www.dallasfed.org.
the rise.
• Interest rates are still facing downward
pressure. Most fixed rates reached the 7 perFor questions regarding
cent mark for the first time since the early 1980s
as each category of interest rates continued
information in the release,
to decline.

0
01 :'96

01 :'97

01:'98

01:'99

Less

Same

01 :'00

•

01:'01

01:'02

Greater

Funds Available for Additional Lending
Seventy-four percent of bankers
indicate no change in funding.
Percent
100

0
01:'96

01 :'97

01:'98

01:'99

Less

Same

01:'00

•

01:'01

01:'02

Greater

Rate of Loan Repayment
Ten percent of respondents experience
increased loan repayment.
Percent
100

contact John Thompson,
(214) 922-5191.

0
m~

Less

•

Same

•

Greater

STATISTICAL RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Seventy-three percent of bankers cite
unchanged renewals and extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
60

Percent
----------~~~~~~~- 10

60
20

55
50

0
01 :'96

01:'97

01 :'98

Less

01 :'99

•

01 :'00

Same

•

01 :'01

01 :'02

Greater

Amount of Collateral
Seventy-nine percent of respondents
require no additional collateral.

Actual Ratio

Desired Ratio

35
2001 :4

2002:1

2002:2

2002:3

2002:4

Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

Banks Reporting (Per cent)
60

Ratio

2002
Ju]y 1

Jan. 1

April 1

22
15
21
21
22

20
17
16
22
26

Oct. 1

2003
Jan. 1

16
14
17
20
33

14
17
18
21
30

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

19
12
20
20
30

0
m~

Less

•

Same

•

INTEREST RATE-FIXED

Greater

Total Agricultural Loans at
Eleventh District Banks
Loan volume rises after a slight
decrease in second quarter 2002.

Average Rate (Per cent)

2003

2002
Ratio

Jan. 1

April 1

Ju]y 1

Oct. 1

Jan. 1

8.31
8.37
8.45
7.98

8.23
8.30
8.23
7.99

8.14
8.19
8.24
7.82

8.08
8.08
8.10
7.79

7.62
7.67
7.73
7.51

Millions of dollars (seasonally adjusted)

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

5,600
5,400
5,200
5,000

INTEREST RATE-VARIABLE

4,800
4,600

Average Rate (Percent)

Jan. 1

April 1

Ju]y 1

Oct. 1

2003
Jan. 1

7.29
7.43
7.26
7.00

7.23
7.34
7.29
7.08

7.20
7. 19
7.19
6.95

7.03
7.13
7.10
6.77

6.71
6.87
6.83
6.57

2002

4,400

Ratio

4,200
4,000
3,800
3, 600-+-~~~~~~~~~~~~~~~~~

•w••~~~~~~-w~•m~m

Note: Some of the volatility observed in agricultural loan levels is due
to the acquisition of several Eleventh District banks by banks
headquartered in other Reserve Districts.

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

STATISTICAL RELEASE

CROPLAND-DRY LAND

Rural Real Estate Values
January 1, 2003

Region

' Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation.
n.r.-Not reported due to insufficient responses.
NOTE: In recent years we have seen some agricultural
land values driven up as a result of urban
expansion and land conversion to recreational
use. These inflated values were sometimes
omitted to reduce volatility in reporting regions.
Eventually the number omitted grew so large as
to threaten the reliability of the data series.
Therefore, we are reinstating all reported land
values. This revision includes data reported from
first quarter 2001 through second quarter 2002.
Historic tables containing these data can be
found at www.dallasfed.org/htm/data/about.html.

Beventh Federal Reserve District

174

674

2.3

5.3

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

161
21
20
14
15
13
21
11
20
11
4

676
283
358
311
408
593
1,063
782
1,201
1,012
646

2.4
0.4
0
-2.6
-1.2
0
5.2
-0.9
4.3
4.0
4.1

5.6
-1.5
0.4
-5.7
0.7
-3.3
7.0
0.9
17.0
13.8
2.2

586

1.8

1.4

9
4

707
253

0.5
0

2.8
-1.3

Northern Louisiana
Southern New Mexico

CROPLAND-IRRIGATED

12
MEXICO

2
3
4
5
6
7

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

8
9
10
11
12
13

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

Percent Changes'
in Values from
Previous Previous
Quarter
Year

119

804

2.3

1.4

103
19
19
13
12
3
n.r.
6
11
4
4

750
587
720
517
661
948
n.r.
878
1,804
717
825

3.1
3.0
-1.2
1.2
3.7
n.r.
0.8
-0.9
5.9
-0.1

2.3
-2.0
7.6
-0.8
0.4
0.5
n.r.
-3.9
18.6
-2.6
-6.1

1,363

11.4

9.4

9
7

932
1,288

0.9
-1.8

5.5
-4.3

1.1

RANCHLAND
Region

1992 dollars per acre
1,600

.........
200

Average
Banks'
Value'
Fourth Quarter 2002

DISTRICT

Northern Louisiana
Southern New Mexico

Eleventh District Real Land Values
Quarter-over-quarter dry/and and irrigated
land values increase 2 percent, and ranch/and
values increase 1 percent.

400

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

Region

HEW

Average
Banks'
Value'
Fourth Quarter 2002

Dryland

--------"'"'""'""
Ranchland

,. -

Average
Banks'
Value'
Fourth Quarter 2002

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

182

493

1.5

4.8

166
19
14
14

1.7
-0.2
1.0

13
22
19
22
9
4

583
190
180
197
326
683
1,062
893
1,489
870
689

-0.8
1.9
6.1
0.2
9.5
-0.3
0

7.3
-0.1
10.2
-0.9
8.2
4.3
11.3
2.4
20.7
15.6
12.8

456

-1.4

-1.1

8
8

575
233

-5.0
0.1

-26.8
-9.5

Northern Louisiana
Southern New Mexico

-1.1

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-Northern High Plains
Prospects for wheat yields are positive.
There needs to be a rebound in the price.
Excellent cattle gains and the strengthening
market provide a positive outlook.

Region 2-Southern High Plains
The conon crop is almost all harvested,
and overall yields are better than average. The
peanut crop was very good, and as a result of
the new farm bill, the peanut farmers realized
better-than-average income.
It appears most borrowers will do fine
this year. The new government payments are
a nice surprise and make up a large portion of
overall farm income. We are still seeing some
producers leave the business for various reasons after a difficult 2002 crop.

Region S- Cross Timbers

Region 10-South Texas

We are in excellent shape regarding moisture; small grain and grazing are very good.
However, we still need runoff rains.

Cash lease on irrigated farmland is
expected to be reduced due to the Joss of the
peanut program (quota system). In addition,
our local economy is starting to see the negative economic impact, with the closing of a
peanut-shelling plant and the layoffs of farm
workers as producers cut peanut acreage.
Some producers are not going co plant any
peanuts next year.
Farmers are trying to get into the FSA
office to sign up for the new farm program. It
appears to be a complicated and time-consuming process for some farmers. There have
been quite a few complaints, and there is concern about timing of payments.
Rains have slowed the sugar cane harvest, but harvesters are back in the fields now
and making good progress. Not all the
planned vegetable acreage got planted
because fall rains made fields too wet to
plant. The citrus harvest is under way, and it,
too, was delayed by rains. The rainfall will
help the trees and [increase] fruit size. Pasture
conditions have improved. Cattle prices at
auction barns remain good. Cattle prices are
up, with some price quotes in the low 70s.
Farmland 10 to 20 miles from the city is being
developed and seems to be commanding a
premium. It appears developers are targeting
cheaper farmland farther away from urban
areas now.

Region 6-North Central Texas
After all crops were harvested, the yields
were slightly lower than expected. Yields
varied greatly from farm to farm. Most of the
differences can be attributed to delayed planting because of weather conditions in the
spring. Overall, repayment was below what
was expected in July through September but
adequate to allow our farm customers to
continue. Cattle prices were off in early fall
but now seem to have recovered. The recovery will help our stocker operations by offsetting some of the higher feed costs.
The 2002 crop year is still uncertain.
Farmers are reluctant to sell crops even though
prices are higher than in 2001. There will be
carryovers due to decreases in yields. Insurance
is not enough to make up the shortfall.

Region 7 - East Texas
Most dairy customers are now feeling the
full effect of low milk prices and increased
feed costs. Demand for poultry loans is good.

Region 8-Central Texas

Region 3-Northern Low Plains
,_

Major field crops in our area are conon
and peanuts, with some farmers converting co
hay and milo this year. The peanut harvest is
complete; yields were 90 percent of average
because of inclement weather during harvest.
The corron harvest is under way, and it
appears that yields on a per acre basis will be
berrer than average. Cotton prices and USDA
payments are the major areas of concern at
this time.

Land values continue an upward trend,
primarily due to demand for recreational land.
Markets for crops and livestock do not provide
enough cash for even the best-managed operations to remain viable. All but five of our 75
farm and ranch borrowers now work off the
farm.
These are the best agricultural conditions
(weather) in 20 years. The cost of production
is down; prices are down but stable.

Region 4-Southern Low Plains

Region 9-Coastal Texas

This will be an improved season. Crop
yields are much berrer than in the past year.
Carrie prices have rebounded. Feedlot closeouts are profitable. Moisture accumulation has
been extremely good and will carry over to
2003. Winter wheat prospects are good. The
new farm bill will provide an improved underpinning to producers. Demand for land is very
good, but not much is available for sale.
Recent irrigated farm [sales] are bringing
$100-$200 per acre more than last year.
Peanut producers whose quotas have been
bought out by the government have experienced a real windfall.

We continue to experience strong competition from Farm Credit System lenders.
Production loan requests are expected to
be lower in the first quarter. Several older
farmers retired last year, and they are not
being replaced by younger producers.
Established producers are also expected to cut
back production as they see how the new
farm bill will affect them. Times are still tough
on the farm. Rice prices are still very low as
inputs continue to outpace outputs. There is
not much export demand for rice.

Region 11-Trans-Pecos and
Edwards Plateau
Very linle land is changing hands between
producers. It is mostly sold for recreation to
nonresidents who keep some livestock for
tax purposes. We have received some good
rain this year and pastures are responding.
They are still dry, though, and it will take a
couple more years like this, plus good range
management, to bring pastures back to maximum advantage.

Region 13-Northern Louisiana

Farmers anticipate the best harvest in
years. Yields were far above average and
quality was excellent. Two hurricanes and an
additional 10 to 15 inches of rain diminished
yields tremendously. Corron dropped from
unheard-of yields of 1,200-1,500 pounds
down to 750-850 pounds. Quality was also
diminished due to the wet fall and poor harvest conditions.

Full text of Agricultural Survey : Fourth Quarter 2002

FRASER