Full text of Agricultural Survey : Fourth Quarter 2019

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

Agricultural
Survey
Fourth Quarter 2019

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?
Index

ankers responding to the fourth-quarter survey reported overall weaker
conditions across most regions of the

Demand for loans*

Eleventh District. They noted that poor rainfall

Availability of funds*

throughout the year contributed to dry condi-

Rate of loan repayment

tions, affecting crop yields. The cattle market is

Loan renewals or extensions

one of the few bright spots in Texas agriculture.
Market Facilitation Program and Price Loss Coverage payments from the U.S. Department of
Agriculture have helped, but it may be too little,
too late for some, according to respondents.

10

ing its 17th quarter in negative territory. Loan

0

-20

compared with a year ago (Figure 1).

-30

and ranchland values increased moderately
(Figure 2). According to bankers who responded in both this quarter and fourth quarter
2018, nominal cropland and ranchland values

The anticipated trend in farmland values index increased slightly after being flat for a year,
suggesting respondents expect farmland values to pick up moderately. The credit standards
index went up, indicating further tightening of
standards on net (Figure 4).

-8.1

-2.9

15.4

66.3

18.3

13.9

13.3

18.1

77.1

4.8

-16.7

-10.3

4.7

80.4

15.0

11.1

15.2

17.1

81.0

1.9

Loan renewals
or extensions

Rate of loan repayment

Demand for loans*

-40
-50

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

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

increased year over year in Texas, northern
Louisiana and southern New Mexico (Table 1).

qLess

-10

Loan volume fell across all major categories

this quarter, while dryland values held steady

Same

30

decline, with the loan demand index register-

District irrigated cropland values stabilized

pGreater

Availability of funds*

40

20

rate of loan repayment continued to decline.

2019: Q4

Index
50

Demand for agricultural loans continued to

renewals and extensions increased, and the

Percent reporting, Q4

2019: Q3

2019: Q3

Percent reporting, Q4

2019: Q4

pGreater

Same

qLess

Non-real-estate farm loans

-10.4

-11.1

8.3

72.2

19.4

Feeder cattle loans*

-23.7

-25.8

4.3

65.6

30.1

Dairy loans*

-21.0

-24.2

0.0

75.8

24.2

Crop storage loans*

-15.9

-14.9

5.2

74.7

20.1

1.0

-3.8

14.3

67.6

18.1

Farm machinery loans*

-22.4

-19.6

3.6

73.2

23.2

Farm real estate loans*

-10.5

-14.0

8.2

69.6

22.2

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
Northern High Plains
} Late rains and cool temperatures slowed
harvest, and yields have been disappointing—ranging from 10 to 20 percent below
expectations—resulting in low profits.
Expenditures on equipment remain down.
The cattle market is one of the few bright
spots in Texas Panhandle agriculture.

} Tariffs have hurt producers, but Market
Facilitation Program (MFP) payments are
lessening the blow. Crop yields are going
to end up about average for 2019, but
prices are lower. Wheat pasture looked
exceptional 60 days ago but may not end
up being as good as expected.

} I once read that all a farmer has control over
is the depth he plants the seed. For everything after that, he is reacting to a variable.
It is very true, and 2019 might have set a record for one of the most volatile years ever.

} MFP payments have brought most farm
loans to breakeven.

Southern High Plains

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

region usually has concentrated areas of

cattle. Cow and calf prices have been low

short crops from isolated weather events,

the last 60–90 days. We are hopeful prices

this year is different. All crops across the

will rebound in January.

entire region were short—dryland off
about 50 percent and irrigated about 30
percent. MFP payments will help, but this
will be a very challenging season.

Northern Low Plains
} Cotton harvest is winding down; yields on
irrigated acres have been slightly down
from yearly averages, and harvested dryland acres are yielding less than average.
Wheat is doing poorly. Pasture conditions
are below average due to drought and
grasshopper pressure during the growing
season. This area is needing rain.

Southern Low Plains
} MFP payments will help low prices for
cotton, which has an average yield at best.
Prices for stocker and unweaned calves are
low and below breakeven prices for the
first time in several years. More rain and a
new year bring hope.

} The agriculture industry needs help—lower

} It’s an extremely difficult year for all pro-

input costs and a fair price for their products.

duction agriculture enterprises. Markets

} Prices are still the major factor with market-

and weather have reduced the equity

ing cotton despite some relief from MFP
payments. Crop production is off about 30
percent due to excessive heat in July.

} Crop production is not what was expected—prices are low and cost is high. Producers have been losing equity in their financial
statement for many years now and will do
so again. MFP and Price Loss Coverage (PLC)
payments helped, but it may be too little,
too late for some.

positions of most farmers/ranchers. It’s
not a promising outlook. MFP payments
helped, but [farmers/ranchers] will most
likely need more to survive this crisis.

North Central Texas
} Same old story: Regulatory requirements
are hurting the consumer.

} We’re still hoping grain prices go up. We
need rain!

} Expense structures are not leaving much
room for profit even where yields are good.
This has drastically increased the risk to the
producer and their bankers.

East Texas
} Extreme wet conditions in late 2017 into
2018 are reflected in late calf crops into this
year. In addition, extended drought conditions in this quarter have affected calf sales
as calves are lighter, and with depressed
market conditions, more producers are
holding calves longer, causing extension
or loan modifications. Cropland field work
is on schedule or close to it for the first time
in two years.

} Land prices have been increasing; we feel
this is partly due to the increase in people
moving here from out of state (California).
Large agriculture properties are being broken up for development. We are also seeing
land that was in agriculture production
being mined for rock to satisfy the need
caused by new-home construction.

Central Texas
} We’re still in need of rain—it has been spotty. Early winter grass plantings are looking
good, and it looks like we might get by with
no armyworms this fall. Hay supplies will be
used up this year if cold weather continues
throughout the winter months. There’s no
pecan crop at all this year. Oil and gas exploration is continuing at a steady pace, albeit
below previous levels. Land sales seem to
have leveled off at this time.

} Results have been very disappointing. We

} Most of our cattle ranchers have ample

started the year with abundant subsoil

hay put up for the winter, and we are ex-

} The cattle market has been off, especially

moisture, followed by generally good

pecting a mild winter. We still have some

on “plain” cattle. The area has dried out con-

planting rains. The spigot turned off in July

of our farmers planting less crops due to

siderably, making winter pastures grow at a

and August, and the thermometer rose.

the unpredictable weather conditions

much slower rate. Stock ponds are in need of

Crops “gave up the ghost.” Although our

of recent years and buying more feeder

a fill-up. The general economy is very good.

Agricultural Survey | Fourth Quarter 2019 | Federal Reserve Bank of Dallas

Table 1—Rural Real Estate Values
Fourth Quarter 2019
Banks1
LOUISIANA

NEW MEXICO

Average
value2

4Q 2019

Percent change3
in value from
previous year

Cropland—Dryland
District*

84

1,958

2.8

Texas*

74

1,974

2.0

1

Northern High Plains

10

970

3.8

2

Southern High Plains

9

867

1.4

3

Northern Low Plains*

4

848

3.0

4

Southern Low Plains*

6

1,200

-1.7

5

Cross Timbers

6

North Central Texas

7

TEXAS

Regions of the
Eleventh Federal
Reserve District

Trans-Pecos and
Edwards Plateau

4

1,738

15.9

15

3,230

9.8

East Texas*

7

3,232

0.0

8

Central Texas

7

3,493

3.4

9

Coastal Texas

3

1,933

-3.4

10

South Texas

3

2,050

-18.0

11

Trans-Pecos and Edwards Plateau

6

2,500

1.2

12

Southern New Mexico

4

613

63.5

13

Northern Louisiana

6

2,725

7.8

District*

63

2,656

2.4

Texas*

51

2,352

3.8
12.8

Cropland—Irrigated

} Livestock prices have remained fairly stable, even
though cattle have come off some in the last three

1

Northern High Plains

10

2,263

or four months. Calf prices are still workable if the

2

Southern High Plains

9

1,761

-2.4

weather will cooperate. A very cold, dry winter with

3

Northern Low Plains*

3

1,751

-13.4

4

Southern Low Plains

11.1

5

Cross Timbers

6

increased feeding requirements will not bode well
for operators. Meat goat, lamb and wool markets
remain pretty strong. Indications are that this winter
may be a bit drier and milder than most.

} Dry pasture conditions in recent months are creating some challenges for the future in the ranching
business. Livestock is in good condition at present,
but feeding is increasing. We are in need of rainfall to
bring on the weeds relied on in winter. Sheep, goat

4

2,075

n.a.

n.a.

n.a.

North Central Texas

5

3,640

18.3

7

East Texas

4

3,700

4.8

8

Central Texas

6

4,117

2.0

9

Coastal Texas

n.a.

n.a.

n.a.
-8.9

10

South Texas

3

3,400

11

Trans-Pecos and Edwards Plateau

4

3,588

0.0

12

Southern New Mexico

6

4,125

-9.2

13

Northern Louisiana

6

4,175

9.8

District*

92

2,029

5.0

Texas*

81

2,414

4.4

Ranchland

and cattle prices remain fairly good, with a number
of producers having taken advantage of lower
replacement cattle prices in the past few months to

1

Northern High Plains

10

730

12.5

increase numbers. Predators remain a cause for con-

2

Southern High Plains

6

825

-1.5

tinued decreases in numbers, particularly in sheep.

3

Northern Low Plains

4

825

3.1

We’re likely going to see continued challenging

4

Southern Low Plains*

5

1,153

-4.1

times ahead.

5

Cross Timbers

6

1,888

14.1

6

North Central Texas

14

3,493

10.2

Southern New Mexico

7

East Texas

12

3,079

-1.4

8

Central Texas

7

6,086

-0.6

9

Coastal Texas

n.a.

n.a.

n.a.

3

2,967

11.2

} Farmland values are increasing due to the oil and gas
industry. The industry is buying up land for offices
and shop buildings.

} Cool weather during spring planting appears to have
impaired cotton yields a little, but producers are still
reporting good yields. Corn yields are down some.
As always, more moisture would be welcomed.

10

South Texas

11

Trans-Pecos and Edwards Plateau

12

2,283

3.2

12

Southern New Mexico

5

360

26.3

13

Northern Louisiana

6

2,392

6.1

*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 | Fourth Quarter 2019 | Federal Reserve Bank of Dallas

Figure 2—Real Land Values

Figure 3—Real Cash Rents

2018 dollars per acre
2,800

2018 dollars per acre per year
60

Irrigated

2,600

Irrigated

50

2,400

120
100

40

2,200
Dryland

2,000

80

Dryland

30

1,800

60

1,600

20

Ranchland

1,400

40

Ranchland

10

1,200
1,000

2018 dollars per acre per year
140

0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

NOTE: Survey responses are used to calculate.

Long-term farm
real estate

Intermediate
term

Other farm
operating

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

0

NOTE: Survey responses are used to calculate.

Table 2—Interest Rates by
Loan Type
Feeder cattle

20

Fixed (average rate, percent)

Figure 4—Anticipated Farmland Values and Credit Standards
What trend in farmland values do you expect in your area in the next three months?
Index

Anticipated trend in
farmland values*

6.88

6.95

6.78

6.58

2019: Q1

7.01

7.11

6.88

6.58

Q2

7.02

7.11

6.83

6.40

Q3

6.90

6.89

6.71

6.42

Q4

6.58

6.61

6.45

6.11

Variable (average rate, percent)

2019: Q3

2019: Q4

pUp

Stable

qDown

1.0

3.4

9.0

85.4

5.6

What changes occurred in credit standards for agricultural loans at your bank in the
past three months compared with a year earlier?†
Credit standards

2018: Q4

Percent reporting, Q4

2019: Q3

2019: Q4

pTightened

Same

qLoosened

13.1

18.7

18.7

81.3

0.0

Index
50
40

Credit standards †

30
20
10
0

2018: Q4

6.70

6.69

6.66

6.26

2019: Q1

6.81

6.83

6.75

6.44

Q2

6.84

6.85

6.80

6.42

Q3

6.58

6.59

6.50

6.21

Q4

6.39

6.29

6.23

5.88

-10
-20
Anticipated trend
in farmland values*

-30
-40
-50
2011

2012

2013

2014

2015

2016

2017

2018

2019

*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 Dec. 3–11, and 107 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 Jesus Cañas, 214–922–5221.