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S T A T I S T I C A L
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Agricultural Credit Conditions at
Survey Banks in the Eleventh District
Demand for Loans
Sixty-seven percent of bankers report steady
demand for loans.

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

Percent
100

80

Fourth Quarter 2006

Quarterly Survey of
Agricultural Credit
Conditions is compiled from
a survey of Eleventh District
agricultural bankers. This
publication is prepared by
the Federal Reserve Bank
of Dallas and is available
without charge by writing
to the Research Department, Federal Reserve Bank
of Dallas, P.O. Box 655906,
Dallas, TX 75265–5906,
or by telephoning
(214) 922-5254. It is
available on the web at
www.dallasfed.org.

For questions regarding
information in the release,
contact Laila Assanie,
(214) 922-5191.

Eleventh District agricultural lenders report
moderate improvement in conditions in fourth
quarter 2006. Although loan repayment and fund
availability increased slightly, indicating better
liquidity, some bankers expressed caution over
the future cash flow situation of dryland farmers
in the district. On the production side, while
good rains in December helped allay drought
conditions in many regions, additional moisture
was needed in some others. Dryland crop
production was well below 2005 levels, and
rising feed prices, along with lower cattle prices,
continued to hurt ranchers. Some bankers
anticipate that the high price of corn resulting
from increased demand for ethanol could lead
to credit problems for cow/calf operators and
dairy farmers next year. By contrast, farmers are
optimistic that higher grain and corn prices will
yield better farm income in 2007.
Here are additional details from the survey:
• Bankers indicate that 1031 tax-deferred
land exchanges and renewed interest in
recreational use and energy sources such as
natural gas and wind have continued to push
up the price of farmland. The price of dryland,
irrigated land and ranchland rose 2.5 percent,
2.4 percent and 3 percent, respectively, in the
fourth quarter.
• Lackluster crop yields, coupled with
higher production costs, have lowered farmers’
cash flow, contributing to bankers’ expectations
of an increase in loan volume. Twenty percent
of bankers anticipate making more non-real
estate farm loans during the next three months,
compared with 15 percent a year ago. In
addition, 23 percent of bankers foresee greater
demand for operating loans, up from 19 percent
in fourth quarter 2005.
• Lack of good-quality wheat pastures for
grazing and rising supplemental feed costs have
lowered the demand for feeder cattle loans. As
a result, 26 percent of respondents expect to
make fewer feeder cattle loans over the next
three months, up from 21 percent expressing a
similar sentiment last quarter.


60

40

20

0
Q1:'00

Q1:'01

Q1:'02
Less

Q1:'03

Q1:'04

Same

Q1:'05

Q1:'06

Greater

Funds Available for Additional Lending
Funds available for lending have increased, say 22
percent of respondents.
Percent
100

80

60

40

20

0
Q1:'00

Q1:'01

Q1:'02
Less

Q1:'03
Same

Q1:'04

Q1:'05

Q1:'06

Greater

Rate of Loan Repayment
Eight percent of respondents say the incidence of
loan repayment increased in the fourth quarter.
Percent
100

80

60

40

20

0
Q1:'00

Q1:'01

Q1:'02
Less

Q1:'03
Same

Q1:'04

Q1:'05

Greater

Q1:'06

S T A T I S T I C A L

R E L E A S E

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Despite reports of lackluster crop yields, 81 percent of
bankers indicate no change in renewals or extensions.
Percent
100

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

80

70
60

65
60

40

55
50

20

45

Actual ratio
0
Q1:'00

Q1:'01

Q1:'02
Less

Q1:'03

Q1:'04

Same

Q1:'05

40

Q1:'06

Desired ratio

Greater

2005:4

2006:1

2006:2

2006:3

2006:4

35

Amount of Collateral
Ninety-four percent of bankers report that collateral
requirements remain the same.
Percent
100

80

Distribution of Loan-to-Deposit Ratios				
Banks Reporting (Percent)

60

2006
Ratio

40

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

20

0
Q1:'00

Q1:'01

Q1:'02
Less

Q1:'03

Q1:'04

Same

Q1:'05

Q1:'06

Jan. 1

20
15
21
14
30

2007

Apr. 1

Jul. 1

Oct. 1

Jan. 1

25
11
21
15
28

16
14
27
13
30

18
9
22
18
33

18
15
16
17
33

Interest Rate—Fixed				

Greater

Average Rate (Percent)

Total Agricultural Loans at Eleventh District Banks
Loan volume rises for the second consecutive quarter.
Millions of dollars (seasonally adjusted)

2006

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

6,400
6,200

2007

Jan. 1

Apr. 1

Jul. 1

Oct. 1

Jan. 1

8.86
8.85
8.72
8.11

8.96
9.15
8.84
8.19

9.37
9.57
9.19
8.12

9.61
9.68
9.36
8.53

9.45
9.61
9.31
8.71

6,000

Interest Rate—Variable				

5,800
5,600

Average Rate (Percent)

5,400

2006

5,200

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

5,000
4,800
4,600
’96

’97

’98

’99

’00

’01

’02

’03

’04

’05

’06

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.



2007

Jan. 1

Apr. 1

Jul. 1

Oct. 1

Jan. 1

8.26
8.37
8.20
7.79

8.53
8.84
8.62
7.96

9.10
9.32
9.18
8.66

9.47
9.55
9.48
8.73

9.46
9.59
9.41
9.20

S T A T I S T I C A L

Rural Real Estate Values

R E L E A S E

CROPLAND­—DRYLAND				

January 1, 2007
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.

Region

2

Eleventh Federal Reserve District
1
3
12
N E W

2

M E X I C O

L O U I S I A N A

5

13

6

7

8

8
9
10
11
12
13

998

2.5

15.7

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

116
19
14
7
11
12
17
5
17
8
n.r.

1,012
362
404
450
535
880
1,647
1,115
2,040
1,088
n.r.

2.6
0.9
–2.4
5.8
–1.5
2.2
2.9
–4.9
4.8
7.4
n.r.

17.0
8.7
–6.1
13.2
4.7
13.0
8.3
22.3
27.6
4.0
n.r.

5

1,150

11.4

51.2

4
5

905
349

0.5
1.7

1.2
3.8

CROPLAND­—IRRIGATED				

Region

9

DISTRICT

10

1   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

125

T E X A S

11

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

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

Percent Changes3
in Values from
Previous
Previous
Quarter
Year

DISTRICT

Northern Louisiana
Southern New Mexico

4

Average
Banks1
Value2
Fourth Quarter 2006

Northern Louisiana
Southern New Mexico

Average
Banks1
Value2
Fourth Quarter 2006

Percent Changes3
in Values from
Previous
Previous
Quarter
Year

81

1,139

2.4

14.4

70
17
14
6
7
3
n.r.
3
10
4
n.r.

1,049
755
828
769
690
1,658
n.r.
1,556
2,513
1,215
n.r.

2.0
1.2
–1.0
4.3
–4.6
1.0
n.r.
3.7
1.5
3.9
n.r.

14.9
9.5
2.5
19.3
–8.1
19.5
n.r.
52.0
16.0
1.3
n.r.

4

1,971

9.3

17.5

4
7

1,160
2,020

2.7
4.2

6.0
16.2

RANCHLAND				
Eleventh District Real Land Values
The average price of ranchland surpassed that of dryland in the fourth quarter of 2006.
2000 dollars per acre
1,000
Irrigated

900
800

Dryland

700
600

Ranchland

500
400
300
200
'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

Region

Average
Banks1
Value2
Fourth Quarter 2006

Percent Changes3
in Values from
Previous
Previous
Quarter
Year

DISTRICT

145

1,007

3.0

31.6

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

133
19
12
8
10
13
19
12
20
7
n.r.

1,272
286
303
380
552
1,180
1,817
1,433
2,713
1,139
n.r.

3.1
2.8
6.3
4.0
–0.5
3.4
4.9
4.1
3.5
6.9
n.r.

34.1
7.8
30.2
21.0
10.6
20.5
13.5
18.2
29.1
20.4
n.r.

11

1,290

3.2

36.4

4
8

752
250

0.9
1.7

–7.6
–5.4

Northern Louisiana
Southern New Mexico



S T A T I S T I C A L

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
The outcome for farming in 2007 looks
more favorable than it did in 2006, based on
increased grain prices.
We need moisture as the dryland wheat
crop is beginning to struggle. Land cash rents
have increased due to higher commodity
prices.
Overall, farm results for 2006 were much
better than projected earlier in the year. Cotton
production was well above projected yields.
2007 prospects look promising because of
significant increases in grain prices, which are
being driven to a large extent by the use of
corn to produce ethanol. Banks have already
started contracting the 2007 grain crop.
Region 2—Southern High Plains
Drought conditions took out 90 percent
of our dryland crops, which will impact loans
for 2007.
With the 2006 crop year over, most of
the irrigated farmers will pay out while the
dryland farmers are facing a carryover of their
2006 crop year debt. A disaster payment is
needed for the dryland farmers. Prospects
for the 2007 crop year appear better with the
recent rains and snow.
Escalating corn prices are having a
negative impact on feeder cattle and dairy
customers, which could result in some credit
issues for the year.
Region 3—Northern Low Plains
We received good rains last week, which
should cause the wheat to react and provide
grazing for cattle.
Rangeland is being sold for recreational
purposes. It is then sometimes leased for
grazing. No ranchland is being sold to
agricultural operators because the prices are
too high to raise cattle successfully.
Region 4—Southern Low Plains
Dryland cotton production was very
poor. Most of our borrowers had to take crop
insurance.
Wind farm growth in our area has
increased land values greatly due to current

R E L E A S E

growth and speculation of future growth.
This has limited the availability of real estate
for sale in this four-county area. Some land
owners are listing their land for sale but
retaining “wind rights.” This has limited
the availability of rec­reational as well as
agricultural production land. We are seeing
increased values of smaller farm-acreage sales
for weekend farmers.
High fuel prices and dry weather are
affecting some operations.
The 2006 cotton harvest is winding
down. Last year’s crops produced 72,000 bales
on 52,000 acres; this year’s crop produced
15,000 bales on 52,000 acres. The dryland
wheat crop needs moisture.
Region 5—Cross Timbers
The drought has caused a severe hay
shortage. High-priced hay, now coupled with
skyrocketing grain prices, will put a great
burden on dairy and beef cattle producers.
The wheat crops need rain. Cattle prices
are lower, but they are still good. Stock ponds
are low.
The higher wheat prices have more
people looking to cut wheat rather than graze
it out. This has lowered our dollar volume on
cattle loans.
We have had 100+ days with no moisture.
There is very limited wheat pasture, and stock
tanks are one-third or less capacity.
Region 6—North Central Texas
Drought conditions continue to linger;
thus, winter grazing is less than normal. It is
very important that we see replenishing rains
prior to the March planting dates.
Hay prices have been high, but the
fall moisture has helped as the fall cuttings
were nearly as good as the spring’s. Gas and
diesel prices have been holding steady, and
hopefully they won’t rise much. The key is
going to be rainfall; how much and when it
falls will tell us what the cow market will do
and what the hay situation will look like.
1031 tax-deferred real estate exchanges
keep pushing land prices up. Land prices
west of Interstate 35 are so high that land on
the east side is more attractive. At least grain
prices are up, but we need more water.
We need rain for stocker operations. The
price outlook for corn is positive. Farmers
are planning on [planting] more corn for
2007. Prices for land continue to increase in
Williamson and surrounding counties due to
development and new roads.
Drought conditions and declining cattle
prices have caused a number of the local
producers to not purchase or contract for gain
calves this year. Hay is in extremely short
supply. Rising grain prices are causing concern
also in the cattle market. The futures price on



corn is the only bright spot on the horizon.
Several large tracts of land have sold recently
to investors for recreation and development.
Region 8­—Central Texas
Hay is still in short supply; most round
bales are getting $70–$80 delivered price.
Several producers are considering selling out
after the first of the year if conditions don’t
improve. Pasture conditions are terrible; winter
oats and rye are suffering. Real estate sales
are stable, although the number of listings is
decreasing.
Land values continue to rise due to
demand for recreational purposes. 1031 taxdeferred land exchanges are becoming more
common, which is helping to fuel higher
prices.
Region 9—Coastal Texas
Land values are increasing from investors
buying property for long-term gains, rather
than for agricultural purposes. Metropolitan
growth close to our area is the primary cause
of the jump in land values.
Region 11—Trans-Pecos and
Edwards Plateau
Most range real estate loans are for 20
years with three- or five-year adjustable rates.
Few land sales are being made to ranchers;
most are to professionals from out of the area.
We need rain.
2006 was a devastating year for the
Edwards Plateau in terms of rainfall. Cattle,
sheep and goat prices trended down somewhat at year-end but were still fairly good.
Ranchland continues to be taken out of pro­
duction as real estate is being purchased for
recreational use.
Region 12—Southern New Mexico
Fall moisture was very good. Land prices
have really started to go up due to ranchland
acquisition by nonagricultural buyers for
speculation and building subdivisions.
Investors are continuing to buy grassland
in the area.
Region 13—Northern Louisiana
This past growing season went from
extremely dry to extremely wet. Up to 15
inches of rainfall put some harvested cotton
modules 1 to 3 feet under water. A good
number of sweet potatoes began to rot in the
field, with harvesters unable to get the crop
out. This year, too much water at one time
seemed to cause more problems than too little
water did earlier.