Full text of Agricultural Survey : Second Quarter 1995

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STATISTICAL

F E D E R A L

R E S E R V E

RELEASE

B A N K

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

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

Demand for Loans
Thirty-eight percent of respondents
report greater demand for loans.
Percent
100

Second Quarter 1995

0
1989

1990

1991

Less

1992

• Same

1993

1994

1995

• Greater

Funds Available for Additional Lending
Seventy-nine percent of respondents report that the
same amounts of funds are available for lending.
Percent

Quarterly Suroey 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,

Second-quarter survey results indicate that
63 percent of surveyed banks would like to
increase the volume of loans available to
farmers and ranchers. Here are additional
highlights from the survey:
• Irrigated land and ranchland values continued to increase in the second quarter of
1995, although dryland values held steady.
Eleventh District ranchland values increased
7.5 percent above last year's level, while
irrigated land values were 3 percent higher.
Dryland values are roughly unchanged from
a year ago.

Federal Reserve Bank of
Dallas, P.O. Box 655906,
Dallas, TX 75265-5906,
or by telephoning

• In the second quarter, cash rents on dryland
and irrigated land changed little from the
first qua1ter. Cash rents on ranchland,
however, fell by 50 percent.

information in the release,

• The typical fixed interest rate charged on
most types of loans fell slightly during the
second quarter, while the typical variable
interest rate fell about 30 basis points.

contact Whitney Andrew,
(214) 922-5179, or Michelle
Thomas, (214) 922-5178.

0
1989

1990

1991

Less

1992

• Same

1993

1994

1995

• Greater

Rate of Loan Repayment
The percentage of respondents reporting unchanged
rates of loan repayment increases slightly to
74 percent.
Percent
100

(21 4) 922-5254.

For questions regarding

100

• Banks' average cost of funds inched up
slightly during the second quarter, rising
about 10 basis points, to 4 percent.

0
1989

1990

1991

Less

1992

•Same

1993

• Greater

1994

1995

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
The percentage of respondents reporting fewer
renewals or extensions of loans decreases slightly.
Percent
100

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

Percent
~~~~~~~~~~~~~~~-

55
40

50
45

1990

1991

1992

Less

1993

• Same

1995

1994

• Greater

II
II

Actual Ratio

35
Desired Ratio

1994:2

1994:3

1994:4

1995:1

1995:2

Amount of Collateral
The percentage of respondents reporting greater
collateral requirements increases.
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS
BO

Banks Reporting (Percent)
1994
J ul. 1

Oct. 1

Jan. 1

19 9 5
Apr. 1

Jul. 1

48
18
17
13
5

41
18
16
14
12

47
20
15
10
9

44
19
16
15
7

42
17
17
14
11

Ratio

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

1990

1991

Less

1993

1992

• Same

1994

1995

INTEREST RATES-FIXED

• Greater

Average Rate (Percent)

Total Agricultural Loans at
Eleventh District Agricultural Banks
Growth of total agricultural loans leveled off in 1994
but increased in 1995.
Millions of dollars (seasonally adjusted)
4,200

Ratio

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

Jul. 1

1994
Oct. 1

9.63
9.81
9.74
9.67

10.05
10.11
10.07
10.14

Jan. 1

1995
Apr. 1

Jul. 1

10.51
10.53
10.56
10.63

11.03
11.06
11.15
11.04

11.01
11.04
11.07
10.74

INTEREST RATES-VARIABLE

4,000

Average Rate (Percent)
3,BOO

Ratio

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

3,600

'B6

'B7

'BB

'B9

'90

'91

'92

'93

'94

'95

Jul. 1

9.62
9.68
9.62
9.48

1994
Oct. 1

10.23
10.32
10.13
10.11

Jan. 1

19 95
Apr. 1

Jul. 1

10.91
10.97
10.77
10.79

11.37
11.43
11.28
11.04

11.05
11.12
11.07
10.74

STATISTICAL

RELEASE

CROPLAND-DRYLAND

Rural Real Estate Values
July 1, 1995

Region

Number of banks reporting land values.
Nominal dollars per acre.
n.r.-Not reported .

NOTE: Regional land values based on a small
number of reporting banks should be used
with caution.
All figures are preliminary.

Eleventh Federal Reserve District

Average
Value2
Banks'
Second-Quarter 1995

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

155

557

-.5

- .5

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

146
17
20
12
17
11
22
8
15
5
8

550
302
347
310
406
465
694
729
837
829
552

n.r
2.6
-.9
.1
1.2
-5.2
-.8
4. 1
-3.3
1.0
.6

-.4
5.9
-.6
8.0
2.0
15.1
1.7
5.8
-10.5
.8
-17.8

535

-4.1

6
3

672
260

-5.7
5.3

-2.7
12.4

Northern Louisiana
Southern New Mexico

CROPLAND-IRRIGATED
12
NEW

M EX I CO

Region

1 Northern High Plains
2 Southern High Plains
3 Northern Low Plains
4

Southern Low Plains

5 Cross Timbers
6 North Central Texas
7

10
11
12
13

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

East Texas

Percent
1,200

1,000

800

600

... _

400
Ranchi and

Dryland

_____ ,_, .

200

0-1-~~~~~~~~~~~~---,,---.--,-~.--

'82 '83

'84

'85

'86

'87

'88

'89

'90

'91

'92

'93

'94

'95

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

102

741

1.9

3.1

89
16
20
9
11
4
3
4
7
n.r
7

649
560
615
413
639
585
674
833
1168
n.r
914

1.9
1.3
2.3
1.6
-.7
-6.2
-7.0
- 3.9
- .2
n.r
.6

- .8
9.5
4.0
-2.3
7.5
-12.6
-20.7
- 8.8
-7.5
n.r
- 13.1

Northern Louisiana
Southern New Mexico

Eleventh District Land Values
Eleventh District ranch/and and irrigated land values
continue to strengthen while dry/and values weaken
slightly.

Average
Value 2
Banks
Second-Quarter 1995
1

785

5.1

-11.7

6
7

922
1534

- 1.9
1.6

1.1
19. l

RANCH LAND
Region

Average
Value2
Banks
Second-Quarter 1995
1

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

161

334

2.3

7.5

150
16
16
12
16
13
21
15
15
3
8

397
189
142
165
236
411
601
695
758
581
436

2.6
6.3
3.8
1.4
1.6
2.6
-1.2
-.4
- 7.7
8.7
2.7

6.8
9.9
5.0
10.7
5.4
21.3
.8
- 1.1
-10.5
14. 1
- 1.1

363

7.1

18.3

5
6

460
150

-.5
.4

2.2
13.5

Northern Louisiana
Southern New Mexico

STATISTICAL

Second-Quarter
Comments
District bankers were asked for any additional comments concerning agricultural
land values or credit conditions. These
comments have been edited.

RELEASE

Region 4-Southern Low Plains

_,_

Wind, hard rain and hail have hampered early cotton plantings but sufficient
moisture should carry crops for 30 to 45
days.
Disease and storms have resulted in a
below-average grain crop. The small crop
and reduced cattle prices have caused
lower than expected loan repayment.
Higher production costs along with lower
repayment rates will cause problems in the
next crop year for some operations.

Region 1-Northern High Plains

Region 5-Cross Timbers

The wheat crop has been poor. Cattle
prices are also hurting. Heavy rains and hail
have hurt wheat, milo and corn crops.
However, the amount of rainfall may help
fall crops. Overall, this year has not started
out well.

A good hay crop is being harvested .
Peanuts are planted and are up in good
moisture. Low beef prices are reducing
profits from cattle and dairy operations.
The ranchland sales that we see are
primarily tied to hunting and not to agricultural use. In the absence of demand
from hunters, ranchland would sell for no
more than $250 per acre; however, hunters
are paying up to $350 per acre for hunting
grounds.
The wheat crop is good in this area.
Cotton crops are planted. Cattle prices are
down.

Region 2-Southern High Plains
The region is extremely dry. The
majority of dryland crop acreage is a total
loss. Irrigated crop expenses are up 30 to
40 percent compared with last year.
Most of the cotton crop on the
Southern Plains will be late because the
good prices encouraged many farmers to
replant with cotton. Signs of bug problems
are showing up early, probably due to the
mild winter.
Lack of spring moisture, high winds,
increased input cost and costs of boll
weevil control are causing the outlook for
this year's cotton crop to be marginal at
best. Late June rains have improved prospects somewhat, but cotton must bring over
70 cents a pound for most producers to
show any profit. The dryland crop in our
immediate area is nearly a total loss.
Recent cotton crop losses in our immediate area due to drought, sandstorms and

Region 7-East Texas

Service delivery by FmHA is improved
over last year. Given the FmHA staff reduction, service is quite good. Demand for
poultry facilities is steady, and out-of-state
competitors are competing for financing.
The continuous fall of cattle prices has
people in this area concerned. In April,
prices were down , but the prices have
fallen even lower since then. Prices today
are about one-half of what they were in the
spring of 1994. Small raisers are selling out
and larger ones are splitting (selling half
and keeping half). This herd-building will
cause another surplus. Dry weather has set
in and may cause a short supply of hay.
The majority of farmers have only one haycutting and the dry weather pattern is
causing people to sell their stock, which is
forcing cattle prices to decline.

Region 8-Central Texas
Grain and cotton crops look good.
Ranchers believe cattle prices are depressed
because of increases in Mexican imports,
which are lower priced.

Region 9-Coastal Texas

~ '-

Region 6-North Central Texas
Overall demand for crop loans should
drop as crops are harvested in the next two
to three months. Demand is expected to
increase in late September and early
October.
A slight decrease in demand is expected for feeder cattle and cow and calf
loans over the next few months because of
a down market.
Lower cattle prices have put cow and
calf producers in a cash flow bind. Prices of
cows are beginning to come in line with

hailstorms have reduced loan repayment
ability substantially by those affected, so
most farmers are collecting multiperil

calf prices. Crops such as cotton and corn
look good. Most cotton is contracted in the
70 to 72 cents per pound range. Demand
for agricultural loans is strong. Most of the

insurance claims and replanting to milo.

larger lines are FmHA guaranteed.

Loan volume is down compared with
1994 because of larger advance deficiency
payments given to rice farmers .

Region 10-South Texas
All-time high cotton prices have resulted
in this crop's being reintroduced into our area.
Many farmers we deal with have sold their
crops forward and have locked in a comfortable profit margin. Weak cattle prices continue to concern us.

Region 11- Trans-Pecos and
Edwards Plateau
Range conditions are excellent. At current cattle prices, cow and calf producers
will have a tough time reducing their debt.
The hay crop is excellent.

Full text of Agricultural Survey : Second Quarter 1995

FRASER