Full text of Agricultural Survey : May 1990 [First Quarter 1990]
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STATISTICAL F E D E R A L RELEASE R E S E R V E B A N K 0 D A F L L A S Quarterly Survey of ·cultural Credit Conditions in the Eleventh Federal Reserve District May 1990 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, District Land Values Continue Stable Agricultural Credit Conditions at Survey Banks in the Eleventh District Preliminary estimates from the Aptil 1 survey of agricultural credit conditions indicate continued stability in Eleventh District land values. District agricultural bankers expect farm and ranch land values to remain stable over the next three months. Demand for loans, availability of funds, rate of loan repayment and renewals or extensions remained unchanged throughout most of the District during the first quarter of 1990. The Southern High Plains, however, experienced an increase in demand for loans, a lower rate of loan repayment and more renewals or extensions. Fund availability increased in Louisiana and the Northern Low Plains. Many bankers indicate that they would like to increase the volume of loans available to farmers and ranchers. Interest rates declined during the first quarter of 1990. DEMAND FOR LoAXS Percent 100 - 80 - 1 6o 40 20 0 1985 1986 Greater AVAILARIUTY OF Federal Reserve Bank of DIS1RICT Dallas, Station K, Dallas, Texas 75222, or by telephoning (214) 220--5127. lAND 1987 1988 • Same 1989 1990 •Less Ft:!\ns Percent VALLES 100 - 1982 Dollars Per Acre 1100 80 - 1000 900 800 For questions regarding 700 information in the release, 6oo contact Fiona Sigalla 500 300 1 200 4--~~~~~~~~~~~~~~~~ (214) 220--5129. 400 1982 Ranch land 1983 1984 1985 1986 1987 1988 1989 1990 1985 1986 1987 Greater 1988 • Same 1989 • less 1990 STATISTICAL RELEASE Agricultural Credit Conditions at Survey Banks in the Eleventh District R ATE OF LoAN REPAYMENT Percent Loan-Deposit Ratios at Survey Banks Average Actual and Desired Ratios Percent 60 55 50 45 1985 1986 1987 1988 1989 1990 Actual Ratio Desired Ratio • 40 35 Greater • Same • Less 1989:1 1989:2 1989:3 1989:4 1990:1 RE NEWALS OR EXTENSIONS Percent 100 - DISTRIBUTION OF LDMHIEPOSIT RATIOS Ban ks Reporting (Percent) 19~9 Ratio Less than 41% ·11% to 50% 51% to 60% 61% to 70% More than 70% 1985 1986 1987 Greater 1988 • Same 1989 • 1990 Apr. 1 J ul. -1 Oct. 1 Jan. 1 1990 Apr. 1 39 23 23 10 5 32 25 20 18 6 31 22 20 17 9 36 21 25 12 6 41 25 20 10 4 INTEREST RATES--flXED Average Rate (Percent) Less AMOUNT OF COLIATERAL Loan type Apr. 1 Percent 100 - Feeder cattle Other farm operating Intermediate-term Long-term farm real estate 13.33 13.52 13.55 13.24 1989 J ul. 1 Oct. 1 J aU:- t 19 90 Apr. 1 13.24 13.32 13.33 12.87 12.85 12.93 12.93 12.67 12.69 12.80 12.86 12.57 12.97 13.03 13.10 12.68 INTEREST RATES-VARIABLE Average Rate (Percent) Loan type 1985 1986 1987 Greater 1989 1988 • Same • Less 1990 Feeder cattle Other farm operating Intermediate-term Long-tenn farm real estate 1989 Oct. 1 Apr. 1 J ul . i 13.50 13.51 13.54 13.24 13.21 13.31 13.24 13.02 12.80 12.92 12.90 12.65 J an . l 12.76 12.84 12.90 12.63 1990 Apr. 1 12.52 12.60 12.60 _12.36 I ~ ·~~~ _·T A . T I S T I C 'A L - R E- L E A S E '-- ~ ~ ' ~ CROPLANO-DRYLAND Rural Real Estate Values April 1, 1990 Average Banks' Value2 First Quarter 1990 Region 1 Number of banks reporting. Dollars per acre. n.r.-No response or not enough responses. 2 NOTE: Regional land values based on a small number of reporting banks should be used with caution. All figures are preliminary. Percent Changes in Values from Previous Previous Quarter Year DISTRICT 254 $555 -0.3 -0.1 TEXAS Northern High Plains Southern High Plains Northern Low Plains Southern Low Plain Cross Timbers North Central Texas East Texas Central Texas Coastal Texas South Texas Trans-Pecos and Edwards Plateau 235 31 22 18 18 18 35 18 30 17 17 558 259 352 320 437 459 704 660 952 809 608 -0.2 -1.0 2.7 0.7 3.6 -1.4 3.2 -4.2 -0.8 -1.5 -1.4 -0.1 3.1 3.7 3.5 2.4 -7.6 -3.3 -2.2 3.3 -1.9 0.6 11 604 -3.6 5.8 Northern Louisiana Southern New Mexico 12 7 568 216 -1.5 0.2 -0.l 4.1 Eleventh Federal Reserve District CROPLANIJ--4RRIGATED Average Value2 Banks' First Quarter 1990 Region 1 2 3 4 5 6 7 Northern High Plains Southern High Plains Northern Low Plains Southern Low Plains Cross Timbers North Central Texas East Texas 8 9 Coastal Texas 10 South Texas 11 Trans-Pecos and Edwards Plateau 12 Southern Nt' WMexico 13 Northern Louisiana Percent Changes in Values from Previous Previous Quarter Year DISTRICT 153 $651 -1.6 1.6 TEXAS Northern High Plains Southern High Plains 'orthern Low Plains Southern Low Plains Cross Timbers North Central Texas East Texas Central Texas Coastal Texas South Texas Trans-Pecos and Edwards Plateau 134 29 20 10 11 7 4 4 12 13 15 636 485 542 467 650 718 1,055 1,002 1,198 820 932 -1.7 0.5 -1.8 3.9 3.9 1.4 -5.8 1.8 -1.4 -1.7 -5.4 4.3 7.0 -2.7 3.6 3.3 -5.9 32.7 9 951 -4.0 5.8 Northern Louisiana Southern New Mexico 10 781 755 -3.2 0.0 -1.6 -15.2 9 15.9 11.4 -2.7 RANCH LANO Average Value2 Banks' First Quarter 1990 Region DISTRICT 271 $307 -1.6 -5.1 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 253 28 15 17 18 21 37 30 32 16 18 388 146 139 181 220 388 619 683 852 612 478 -1.5 -2.4 3.7 2.1 -1.3 -1.2 3.3 0.4 3.4 -2.6 1.5 -5.3 2.4 -4.7 0.1 7.1 -0.8 -1.8 4.0 -5.9 4.0 1.5 21 317 -7.2 -15.7 9 9 379 72 3.7 -2.7 -6.9 -0.8 Northern Louisiana Southern New Mexico ---- Percent Changes in Values from PreVlOus Previous Quarter Year ----- _J STATISTICAL First-Quarter Comments RELEASE Region 4-Southem l..ow Plains "Received some much needed moisture in February and March. Cattle prices are high and crop prospects are good". Region 5-Cross Timbers District bankers were asked for any additional comments concerning agricultural land values or credit conditions. Due to space constraints, some comments were edited. The views expressed do not necessarily represent those Federal Reserve Bank of Dallas. Region 1-Northem High Plains Conditions are very good going into spring. Rainfall has increased chances for an average wheat crop. Cattle prices are holding and operators are making a normal profit. "1989 was extremely tough on area farmers due to early drought and June hail damage. We have seen a few farmers fall by the wayside. Credit standards for 1990 are extremely tough." "Land values appear to be strengthening. The few sales that have taken place have drawn a great deal of interest at significantly higher prices. Our loan volume is down from last year, due to retained earnings and the reluctance of ranchers to purchase cattle at current price levels." Adequate moisture for spring planting and prospects look good. Cattle prices are at a high. Dairy economy is very strong. Cropsp1imarily wheat-are excellent due to above average rainfall, a mild winter and an early spring. Forty to fifty percent of wheat planted will be cut for hay. Hay production should be highest yield in last four to six years. Region 6-1 ·orth Central Texas Area has received rain and is extremely wet. Wheat got off to a poor start due to fall dry soil but now looks good. No corn has been planted and most will plant milo. Cattle on wheat have not gained well and have not been able to graze in some cases. Good prices have helped income from beef cattle. Good moisture for grass should help calf sales in the near tem1. "We are liquid as far as loan funds, but do not anticipate any increased demand for loans that would be of the quality that we desire. We are funding the same number of farm loans we did last year." Region 2-Southem High Plains Region 7-East Texas More wheat will be harvested this year due to late moisture. Farm real estate demand is good with strong demand for irrigated land. Farming costs seem to be higher and rising. "Farm equipment purchases are led by irrigation equipment. Loan volume increased over 50 percent this past year. This increase is attributed to a few new customers, lack of cash flow (due to below average crop) and increased financing of land and irrigation equipment." "Production Credit Association is loaning operating and equipment funds at low rates to try and attract new customers. Looks like the federal government will have to bail out the Farm Credit System again." Region 3-Northern Low Plains "We have three large agricultural loans in Chapter 12 at this time and will take no new agricultural customers until something is done about Chapter 12. We are also having trouble with FHA on 90 percent guarantees and have no intention of doing any more FmHA 90 percent guarantees." Milk and dairy cattle prices are both at an all-time high. Feed prices are stable, giving ilie area a good economic outlook for the next few months. Too few land sales to have a very good idea about prices. "Cattle prices are excellent and most of our loans are on cattle. 111e majority of these loans are performing well." "I believe our national farm program is a disaster. Who can understand it? Lets go back to supply and demand." Re~ion 9-Coast.al Texas Moisture conditions have improved. "Planting has begun and more people are optimistic about iliis crop season. But, we are not out of the woods yet". 'The greatest value to this bank and to many farmers is ilie FmHA 90/10 guaranteed loan program. It enables the farmer to cashflow his operating loan while meeting oilier obligations wiiliout ilie high degree of bank risk. The continuing minimal value of crop proceeds is the greatest problem. Rice farmers could not farm if it weren't for ilie Farm Program deficiency payments. These payments are determined by world market figures and remain too low. Processing and marketing margins are far too high for that which is realized by the farmer." Region 10-South Texas Prices for vegetables remain good but freeze has reduced yields. Valley is still dry and preplant moisture is low. Expect a lot of cotton to be planted this year. Cattle prices remain stable but rain is needed for good spring grazing. Recent land sales have been less ilian one to two years ago. Very few land sales unless dollar per acre is very reasonable. "If this trend continues we are going to see land values going down." Region 11-Trans-Pecos and Edwards Plateau Rain has enabled farmers to stop feeding sheep, and some farmers expect to stop feeding range cattle in another month. Springplanted small grain is looking good. Tremendous increase in land values with minerals. Region 8-Central Texas Region 12-SOuthem New Mexico Cattle prices and cattle loans are increasing. Some ranchers are still culling due to good prices. Spring pastures are looking good. Land prices have gone up some, but there is very little demand. Some sales activity due to oil leasing properties. "We have been hurt by the drought in this area. Farmers and some ranchers have been unable to service debt." "Oil lease and delay rentals providing additional income for some ranchers, as are gravel sales for a few others." "We are now making greater use of the FmHA Guaranteed Loan program." Recent badly needed moisture has wheat alive again and looking prospective for 1990. Insect problems are rising and could become severe. Region 13-Northem Louisiana "More crop loans were not paid in full in 1989 than in 1988. This is attributed to replanting caused by early rains and a lack of rain during the fruiting season."
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