Full text of Agricultural Survey : [Second Quarter 1989]
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FEDERAL RESERVE BANK OF DALLAS STATISTICAL RELEASE QUARTERLY SURVEY OF AGRICULTURAL CREDIT CONDITIONS ELEVENTH FEDERAL RESERVE DISTRICT Preliminary estimates from the July 1, 1989, survey of agricultural credit conditions indicate a slight drop in the demand for loans even though the availability of funds remains strong. Over the last three months, interest rates on farm loans dropped between 10 and 30 basis points which encouraged many lenders. Nearly half of District banks would like to increase the volume of loans available to farmers and ranchers. Feeder cattle loans averaged 13.2 percent for fixed and variable rate loans, and other farm operating loans averaged 13.3 percent during the second quarter. District dryland values, unchanged from April 1, 1989, levels, appear to be stabilizing. Irrigated land values increased, continuing a general upward trend. Second quarter ranchland values slowed their ten year decline as they remained virtually unchanged. After dropping in the first quarter of 1989, second quarter cash rent values rebounded moderately. Agricultural lenders expect farmland values to remain stable over the next quarter. Agriculture Credit Conditions at Survey Banks in the Eleventh District Total 11th Federal Reserve District July 1, 1989 The Survey asked bankers what changes occurred in non-real-estate farm loans in the past three months compared to a year earlier. When the index moves above 100, it indicates that the number of bankers responding "higher is greater than the number of bankers responding "lower". It is important to take into account the percentage of bankers responding "no change" when interpreting the significance of movements in the index. Demand for Loans 1985 1986 1987 1988 Amount of Collateral Required = 56% Percent indicating no change = 66% Rate of Loan Repayment Percent indicating no change = 47% Percent indicating no change Renewals or Extensions 1989 Percent indicating no change = 68% Availability of Funds Percent indicating no change = 56% Agricultural Credit Conditions at Survey Banks Total 11th Federal Reserve District July 1, 1989 Loan-Deposit Ratio (percent) Banks Desired Ratio Distribution of loan-deposit ratios (percent of banks reporting) less than 41% ............. . ... . 41% through 50% ............... . 51% through 60% ............... . 61% through 70% . . ............. . 71% or more ................... . 1988 Jul 1 Oct 1 1989 Jan 1 Apr 1 49.9 59.5 52.3 60.3 48.7 58.0 45.8 57.3 48.1 58.6 30 23 20 18 26 18 23 19 14 32 20 27 13 39 23 23 10 32 25 20 18 7 5 6 9 Jul 1 ---------------------------------------------------------------------------------Interest Rates (percent) Feeder cattle loans Fixed ...... Variable ... Other farm operating loans Fixed ...... Variable ... Intermediate-term farm loans Fixed ...... Variable ... Long-term farm real estate loans Fixed ...... Variable ... 11.87 11. 65 12.43 12.34 12.63 12.79 13.33 13.50 13. 24 13. 21 11.96 11. 75 12.55 12.41 12.79 12.80 13.52 13. 51 13 .32 13.31 12.16 11. 75 12.61 12.44 12.82 12.82 13 .55 13.54 13 .33 13.24 11. 94 11. 61 12.41 12.24 12.49 12.47 13. 24 13.24 12.87 13.02 Farm and Ranch Real Estate Values (Average Dollars per Acre) July 1, 1989 82Ql 82Q2 82Q3 82Q4 83Ql 83Q2 83Q3 83Q4 84Ql 84Q2 84Q3 84Q4 85Ql 85Q2 85Q3 85Q4 86Ql 86Q2 86Q3 86Q4 87Ql 87Q2 87Q3 87Q4 88Ql 88Q2 88Q3 88Q4 89Ql 89Q2 p ----------ELEVENTH DISTRICT--------- ----- -----------TEXAS--------------- Dryland Cropland Dryland Cropland $ 743 750 768 759 753 756 772 800 811 823 805 798 774 759 740 717 684 639 607 595 583 571 562 558 567 573 572 564 556 556 Irrigated Cropland $ 996 970 964 967 984 993 968 944 929 916 905 889 880 833 794 729 697 656 638 624 611 601 595 593 613 635 650 630 641 662 Ranch land $ 398 398 401 403 430 461 481 479 495 503 521 507 503 484 474 450 435 411 396 380 375 371 367 357 354 348 342 329 323 322 $ 691 707 736 730 726 727 746 776 790 803 787 781 759 750 735 713 677 634 606 599 590 580 571 565 573 578 576 568 558 558 Irrigated Cropland $ 908 902 911 908 918 919 903 900 897 895 876 864 842 797 756 698 666 621 603 590 585 576 575 576 586 611 623 617 610 619 Ranch land $ All series completely revised in November 1986 . A three-period, centered moving average is used to reduce the degree of sampling error. The last values of each series are the estimates. Values for the latest period will be revised subsequently. c. Quarter dates are: Ql: April l , Q2: July l, Q3: October 1, Q4: January 1. p - Preliminary estimate . NOTES: a. b. 476 487 500 502 538 568 595 593 603 614 640 646 645 618 607 576 554 521 502 486 481 476 472 457 454 446 436 417 410 410 . Eleventh District 1 Rural Real Estate Values, July 1, 1989 and Percentage Changes from April 1, 1989 and July 1, 1988. A11 Land Values in Dollars per Acre Banks 2 Region -----------------CROPLAND---------------------------------DRYLAND IRRIGATED Value Percent Change from Value Percent Change from 2 Banks $ 4/1/89 7/1 /BB 4/1/89 7/1/88 $ --------------RANCHLAND------------Banks 2 Value $ Percent Change from 4/1/89 7/1 /88 DISTRICT Northern Louisiana Southern New Mexico 255 14 5 555 570 212 0. 0 0.3 2.3 -3.0 2.8 4.7 155 11 11 552 801 1,040 3.3 1. 0 16.9 4.3 5.4 26.8 274 7 10 322 373 69 -0.2 -8 .4 -4.8 -7 . 5 10.0 0.6 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 245 32 30 15 14 23 35 16 30 20 14 558 250 341 317 416 484 729 666 928 822 644 0.0 -0.5 0.6 2. 5 -2.5 -2.5 0. 1 -1. 3 0.7 -0.4 5.5 -3.5 3.2 8.2 8.2 -3.7 1. 9 -4.4 -8.6 -7 .4 -1.8 6.3 143 31 30 11 7 9 4 NR 13 13 10 619 457 563 470 597 755 811 NR 1,108 766 1. 041 1. 4 0.7 1. 2 4.3 -5.0 -1. 0 1. 9 NR 7.2 4. 1 8. 7 1. 2 5. 0 11. 0 8.3 -7.5 -3.7 -5.7 NR 4.2 -9 . 9 13. 6 257 29 21 15 14 23 34 32 32 17 13 410 145 154 192 205 377 646 663 991 583 480 0.1 1. 7 5.7 5.2 0.2 -3 . 5 2.5 1. 0 9.4 -1. 0 1. 8 -8.0 3. 2 8.9 22.9 -3.3 -9 . 3 -4.2 -7.8 11. l -17.7 -0.l 16 550 -3 . 7 -22.8 13 753 -16.2 -32.l 27 357 -5.2 -20.l 1 See attached D1str1 ct M~o for regional divisions. Number of Bank~ Qpr o •tin~ 2 NOTES: a. b. c. Regional land values based on a small number of reporting banks should be used with caution. All values preliminary. No response or not enough responses is indicated by NR. Second Quarter Comments District bankers were asked for any additional comments concerning agricultural land values or credit conditions. Due to space constraints, not all comments could be printed. Region 1 - Northern High Plains ... Approximately 80% to 90% of the cotton crop was hailed out and the corn crop received extensive damage. Most farmers will replant soybeans, although some will go back with late cotton. Over the last 3 weeks, it has been extremely hot and dry. ,.. The 1989 wheat crop was a disaster due to drought, freeze and insect problems. Most producers had FCIC insurance, which will minimize the negative effect on cash flows. Local elevators will be hurt more than the farmers. We need disaster assistance for wheat crops from government. ,.. Good recent rains have made a good home for summer cattle. Corn and milo crops look good. We are currently in need of moisture. Cattle prices as well as grain prices continue to fluctuate making marketing extremely difficult. ,.. Loan demand has been soft. This is primarily due to severe winter and spring drought conditions which have diminished demand for stocker cattle loans. ,.. Farmers planted a great amount of milo after wheat failed in hopes of obtaining a cash crop. Most ranchers have ample grass for summer pasture. We are seeing a herd build-up in this area. ,.. The grass is probably as good as it has ever been at this time of year. Cattle have been doing exceptionally well and stocker prices remain strong. ,.. Summer crop conditions are good. We will have average to above average harvest. Our area is dry at this time, but early rainfall made our summer crop. We will need rain in August and September to help wheat become established for grazing purposes. Loan repayment should come in close to projections. Region 2 - Southern High Plains ,.. Crops are late and it is extremely dry for this time of year. ,.. Outstanding cotton yields in 1987 and 1988, but 1989 looks bleak to date. Extremely dry in many areas. ,.. Irrigated crops are great. Probably a month ahead 'on maturity. We had very little rain in our county, and, therefore poor or no dryland crops. ... Pastures and cattle are in excellent condition. Cotton will need rain to make a good crop. Insect situation shows higher than normal boll weevil counts. Some fields are currently being sprayed. ,.. No rain. Dry conditions. Crops are not good. Pasture grass is not good. I see farm problems. Region 3 - Northern Low Plains ,.. Wheat crop was poor but its price was good. Farmers are still managing to hang on without any further deterioration in condition. FmHA guarantees are working well. ... Very short wheat crop in June. Those with no Federal Crop Insurance had carry-over. Region 4 - Southern Low Plains ,.. FDIC & OCC are draining money from community banks with the large bailouts they are allowing. Then permitting them to pay 2% higher rates on certificates. These actions are not fair. This is tax money as well as our assessments. Region 5 - Cross Timbers ... Cattle prices have been good this year. Ranchers have made good money. Most farmers lost their grain crops. This has been a bad year for farmers. Region 6 - North Central Texas ... We have good rains in our area. Crop and cattle prices are good . ... Agricultural conditions are excellent at this time. We have had ample rain and crops couldn't look better. Some contracts are available to farmers. Grain prices have been increasing. Cattle prices have remained high; grass and hay are excellent. Over all, the agricultural conditions couldn't be better at this time. ... Wheat & oat crops were disasters. Cattle prices are very good and cattle numbers are increasing slightly. Plenty of hay, but still short on reserves. Corn looks fair to good. Maize (milo) and cotton looks very good! (Maize & hay planted over ruined wheat fields.) ... The late freeze--hail storm & rains--just about wiped out the wheat crop. Corn and milo look good at this time. Cattle still looks good. • ,.. Since the last quarterly report, agricultural conditions have changed for the better. We have had an abundance of good rain. The prospect here in the Central Texas Area is looking very good for an abundant harvest. If we can get a good price for the products produced, the farmers can help themselves this year and repay some of the nold debts.n ,.. We had a poor wheat crop in the spring of '89. Milo and corn look good at this time. Cotton insects are heavy and the expense of insect control is a real concern. Cattle prices are excellent. Moisture conditions are good but have contributed to heavy insect infestation. We do not know of any recent real estate sales in the area. ,.. Area wheat farmers suffered severe damage to their wheat crop this year due to the late (April) freeze. Production is about 25% of average production. Production outlook for milo and corn is about average. Region 7 - East Texas ,.. Farm and ranch land values are affected by potential development as well as agricultural productivity. ,.. Most of our ag folks are having a good year. Plenty of rain & hay. Cattle prices good. Anyone not making money this year had better get out. ,.. We have had excellent rainfall this summer. Our dairymen are in good shape from a forage standpoint. ,.. We have had lots of rain in our area this year and hay is plentiful. Region 8 - Central Texas ,.. FmHA's ability to loan funds has greatly reduced the farmers/ranchers who lack sufficient collateral/credit lo be able to borrow operating & purchase money. FmHA's new program of guaranteed loans is not acceptable to lenders in our area. ,.. Hot, dry conditions persist. Small-grain farmers ( dryland) lost all crops. Second year in a row for most. Send rain! ,.. Some need a good general rain. We are dry and lots of our tanks are dry. Cattle prices are excellent. ,.. We have had some very beneficial rains. Stockmen have more grass and hay than needed. Land is not selling. Farmers are leasing their acreage for oiljgas drilling with moderate success. ,.. Shortage of rain has really affected crop production and cattle range. ,.. Drought still hanging on. One farmer told me this is the 5th year without decent crop. This year he has a total loss, as do many other farms in this area. Federal Crop Insurance doesn't help a lot because of the low yields in this county compared to other places. Insurance in some cases will not pay enough to cover feed & fertilizer much less fuel and labor. Cattle prices are good, but very little hay was produced. We are still trying to help ranchers keep their good cattle. Some farmers are cutting milo & corn and rolling it up for hay. But nitroe poison is very common. Bailing a lot of it is worthless. Wheat crops are a total loss. Very bad year in this part of the county. ,.. Land may not have bottomed out yet. Region 9 - Coastal Texas ,.. Row crop land prices have dropped some in the past few months, and buyer interest seems to have lagged. Crop conditions have been spotty with some very poor production. Each applicant will vary this fall, but the ability to finance some farming operations may boil down to what is provided to farmers in the area of disaster funds. Region 10 - South Texas ,.. We have had a severe drought in our area. Maize, corn is harvesting at 1/3 of what it could have been with necessary rain. Cotton crops will be our best income producing crop. Cattlemen are experiencing high cost in feeding their cattle. Most maize fields were put into round bales which will bring cost of this type of feed down some. ... Continued dry weather has hampered 1989 production and will keep loan demand low until this weather pattern improves with moisture. ,.. Land values continue stable on cropland, however, ranchland values have continued to decline particularly with large tracts of land. Loan demand should be on the rise since the 1989 spring crop is harvested. Farmers will be coming in to set up their 1990 Spring crop lines of credit. Also interest rates have dropped which is very encouraging and a positive help to the farmers as well as the banks. Our area has been receiving rains lately however, the rain was too late this year. Extreme drought conditions in South Texas has made 1989 another low production year. Region 11 - Trans-Pecos and Edwards Plateau ... Range and dryland crops are in bad shape due to the lack of rainfall . .,.. We are extremely dry in the Winter Garden area. Cattle, sheep and goat prices remain good which help our ranchers when they have to sell down. Cabbage, onion and cantaloupe prices are good. Dry land farmers didn't make any grain and cotton is hurting. Irrigated crops are doing well. Pima cotton production looking good. Most pima contracted at $1.12 to $1.14/lb. Need rain soon! ... Need rain, higher cattle prices, and more shade. Region 12 - New Mexico .,.. Great year for onions. The heavy rains we experienced during harvest last year are not coming this year. Onion market is very high and farmers are very optimistic. Ranchland is very dry. ... Extremely dry conditions continue. Some rains have helped but they have been spotty. There has been some hail damage to crops in addition to drought and winter kill on wheat. Cattle prices remain good. Feeders still marginal on profit. NE corner of the state reported to have had rains and be in an excellent grass situation. Milo planted and milo (ghost crop) doing only fair to date. Farmers are preparing for wheat planting next month and will try for another year . .,.. We haven't had any rain; the rangeland is looking really bad and feed is getting scarce. The cotton and alfalfa farmers are doing really well; prices are high and there has been no damage to crops. ... Severe drought conditions in the area could affect the amount of operating loans needed and cause carryover credit. This will also have an affect on rangeland values. Cattle prices remain good. Fall calves could be light if it doesn't rain in July. No fall calves have been contracted for sale yet. Region 13 - Louisiana ... Heavy rains and poor planting conditions leave much doubt as to this year's crop. Soybeans, normally planted behind wheat, will probably not be planted this year. Cotton and soybeans are beginning to show damage. Large tracts of prime farm land is still under water with more rain expected. ... Heavy rainfall in the area. Corn looks excellent but wheat & oats harvest was disappointing due to lower than average yields & poor grades. Cotton & soybeans have yellow tint due to excessive rainfall, but have excellent yield potential. Rice presently looks good but we are concerned about potential diseases . .,.. Local heavy rains have hurt soybean farmers in our area. About 25% of farmers hoping to breakeven can only turn a profit with above average price and yields. Local FmHA office and area banks are being swamped by farmers who need additional funds to operate with. ' • 1 2 3 4 5 6 7 8 9 10 11 12 13 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 New Mexico Louisiana ELEVENTH FEDERAL RESERVE DISTRICT '