View original document

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

STATISTICAL

F E D E R A L

R E S E R V E

l

RELEASE
B A

N

K

0

F

D

A

L

L A S

Agricultural Credit Conditions at
Survey Banks in the Beventh District

Quarterly Survey of
·cultural
Credit Conditions in the
Eleventh Federal Reserve District

Demand for Loans
Twenty-three percent of respondents
report less demand for loans.
Percent
100

80

Second Quarter 1998

Quarterly Suruey of
Agricu ltural 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 Resea rch Department,
Federal Reserve Bank of
Dallas, P.O. Box 655906,

Dallas, TX 75265-5906,
o r by telephoning
(2 14) 922-5254.

For questions regarding
information in the rel ease,
contact Sheila Dolmas,
(214) 922-5 191.

The Second Quarter Survey of Agricultural
Credit Conditions underscores that Eleventh
District agricultural producers are experiencing
dire consequences from the current drought. The
unrelenting dry weather has hutt cotton crops and
imperiled cattle herds across Texas. Dairy
production and row crops are also suffering. An
East Texas banker wrote, "So far this spring all
agricultural use of any farmland and ranchland in
our area has been a 100 percent lo s. The drought
has created a permanent loss on thousand of
acres of forage acreage. Soil erosion due to wind
conditions continues to plague these same areas.
If and when it rains, extreme topsoil erosion will
urely occur." And from a banker in the Southern
Low Plains: "All crops have been destroyed
because of no rain, and insurance adjusters have
zeroed all the cotton. If fatmers have additional
insurance, they may try to plant maize. Catde
farms are hurt because of no water and little feed.
It has been a pretty rough year." (See page 4 for
more bankers' comments.)
Here are additional details from d1e survey:
• While the availability of loanable funds
remains stable, 28 percent of responding bankers
report a lower rate of loan repayment (up from 16
percent last quarter), and 27 percent report more
loan renewals or extensions (up from 16 percent
la t quarter).
• Interest rates are stable, but the average
number of farm borrowers has dropped to 98 per
responding banker, down from 119 in the second
quarter of 1997.
• Twenty-five percent of responding bankers
anticipate a downward trend in farmland values
in the next qua1ter, as opposed to 1 percent who
saw such trends last quarter.
• More second-quarter responding bankers
than first-quarter respondents expect the volume
of real estate, feeder cattle, operating and farm
machinery loans to decline.

60

40

20

0
01 :'92

0 1:'93

01 :'94

Less

0 1:'95

• Same

0 1:'96

01 :·97

01 :'98

• Greater

Funds Available for Additional Lending
Seventy-one percent of respondents report
no change in the availability of funds for lending.
Percent
100

80

60

40

20

0
0 1:'92

01 :'93

0 1:'94

Less

01:'95

• Same

0 1:'96

01 :'97

01 :'98

• Greater

Rate of Loan Repayment
Twenty-eight percent of responding bankers
report a decline in the loan repayment rate.
Percent
100

80

60

40

20

01 :'93

01 :'94

Less

01 :'95

• Same

01 :'96

• Greater

0 1:'97

01 :'98

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Twenty-seven percent of respondents
report more renewals or extensions.
Percent
100

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

80

Percent
~~~~~~~~~~~~~~~~

60

55

60
40

55
50

20

45
Actual Ratio

0
01 :'92

01 :'93

01 :'94

Less

01 :'95

Same

01 :'96

01 :'97

40

01 :'98

II

• Greater

35
Desired Ratio

1997:2

1997:3

1997:4

1998:1

1998:2

Amount of Collateral
Eighteen percent of survey respondents
report greater collateral requirements.
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS
80

Banks Reporting (Percent)
60

Ratio

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

40

20

0
0 1 :'92

01 :'93

01 :'94

Less

01 :'95

01 :'96

01 :'97

Same

• Greater

01 :'98

1997
Jul. 1
Oct. 1

24
22
23
17
15

21
18
20
25
15

Jan . 1

1998
Apr. 1

Jul. 1

30
16
26
20
9

33
16
22
21
9

27
17
23
21
12

INTEREST RATES-FIXED
Average Rate (Percent)

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending growth slows slightly
in the first quarter of 1998.

Ratio

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

Millions of dollars (seasonal ly adjusted)
5,200
5,000

1997
Jul. 1
Oct. 1

Jan. 1

1998
Apr. 1

Jul. 1

10.55
10.68
10.48
9.95

10.50
10.60
10.36
9.72

10.46
10.52
10.44
9.66

10.40
10.51
10.15
9.58

10.47
10.56
10.39
9.71

INTEREST RATES-VARIABLE

4,800

Average Rate (Percent)
4,600

Ratio

4,400

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

4,200
4,000

'86

'87

'88

'89

'90

'91

'92

'93

'94

'95

'96

'97

'98

1997
Jul. 1
Oct. 1

Jan. 1

1998
Apr. 1

Jul. 1

10.69
10.66
10.50
10.06

10.45
10.54
10.33
9.85

10.45
10.52
10.42
9.79

10.36
10.48
10.25
9.81

10.69
10.71
10.38
9.88

STATISTICAL

RELEASE

CROPLAND-DRYLAND

Rural Real Estate Values
July 1, 1998

Region
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 .
2

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

DISTRICT

110

567

0.0

0.7

104
13
15
7
13
9
17
3
8
7
4

563
274
329
315
412
559
861
617
902
790
453

- 0.1
0.8
-2.3
0.1
- 0.7
- 0.6
- 1.4
4.7
-0.3
- 1.5
1.2

0.9
-3.5
-2.6
8.2
1.3
11.3
13.6
-14.7
-0.5
-0.7
-9.6

8

549

1.6

2.6

3
3

662
232

1.1
-2.0

-1.8
2.6

CROPLANO-IRRIGA TED

12
M EXICO

13

Northern High Plains

2 Southern High Plains
3
4
5
6
7

Northern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas

Percent Changes3
in Values from
Previous Previous
Quarter
Year

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
Northern Louisiana
Southern New Mexico

NEW

Average
Value2
Banks'
Second-Quarter 1998

10
11
12
13

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

Region

Average
Value2
Banks'
Second-Quarter 1998

Percent Changes"
in Values from
Previous Previous
Quarter
Year

DISTRICT

70

707

-3.7

-4.3

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

62
12
15
4
8
5
n.r.
n.r.
4
n.r.
4

648
530
648
506
621
760
n.r.
n.r.
1,756
n.r.
638

- 2.8
-7.4
-0.9
5.4
-5.4
-1.0
n.r.
n.r.
2.6
n.r.
-1.3

-4.0
-10.1
-1.4
28.3
0.3
10.1
n.r.
n.r.
28.7
n.r.
-17.3

6

911

1.6

6.6

Northern Louisiana
Southern New Mexico

n.r.
6

n.r.
1,229

n.r.
- 8.2

n.r.
- 5.9

RANCHLAND
Real Eleventh District Land Values
Land values stabilize in the second quarter,
with irrigated land values showing some decline.
1992 dollars per acre
1,600
1,400
1,200
1,000
800

/",..
600

0

-

Dryland

400
200

~

Ranchland

Region

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

121

341

2.5

3.0

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

112
12
13
7
12
9
18
9
9
5
4

427
159
142
165
239
474
760
726
801
673
459

2.2
1.2
0.9
6.6
0.8
-0.8
- 1.8
0.5
- 2.7
6.3
5.5

6.6
-5.1
-1.3
11.5
5.4
8.4
10.0
-2.3
-15.0
20.5
4.3

14

387

4.2

17.9

3
6

376
92

-10.9
8.4

-16.3
-28.2

Northern Louisiana
Southern New Mexico
mmM~UW•U~~wm~%~W~

Average
Banks'
Value2
Second-Quarter 1998

STATISTICAL

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

Region 1-Northem High Plains
At the end of the first quaner, we repotted
excellent growing conditions and prospects.
That has all ended. It is like the two cattlemen
on the Titanic. One told the other, '"I think
we're sinking." The other replied, "Don't
worry, when we hit bottom we'll bounce
back. " We are waiting for the bottom.

Region 2 -Southern High P lains
Most of the d1yland cotton crop has
been zeroed for insurance purposes. The
drought is having a significant impact on
proposed repayment capacity, as well as
general farm and off-farm attitudes and
considerations concerning the area economy.
Most dryland cotton went to insurance
with milo planted d1y. There has been no
appreciable rainfall in this area. Cotton
acreage will be greatly reduced.
The heat and drought are reminiscent
of the early 1950s. All the dryland crops have
basically been abandoned and insurance
claims filed. Many acres of irrigated cotton
will also be abandoned as water wells deplete
or limited water is divened to save some
crops. Weevil pressure is low. The peanut
crop will suffer due to high heat and lack of
moisture. Many farmers will fail this year.

Region 4 - Southem Low Plains
Extreme high temperatures and lack of
moisture will prevent any row crops from
being harvested. Crop insurance may not be
enough to clear out all operating loans.
Cattle are beginning to run out of grass. We
need moisture now.
Absentee income has boosted land
prices for recreation and hunting use.
Agricultural income has almost no effect on
land prices.

RELEASE

Land is going to become cheaper,
and the number of agricultural customers
is going to drop 25 percent to 30 percent.

Region 5-Cross limbers
We are having extremely dry conditions.
There has been limited crop production
because of hot d1y weather.

Region 6-North Central Texas
The extremely dry conditions are
beginning to have a large impact on crops
and rangeland. The outlook does not look
good without rain soon.

crops, such as beans or peas. Pastures have
d1ied up, and most people are selling cattle
or having to feed last year's hay, hoping they
will get some hay for this year. Ponds are
beginning to dry up. People are hutting and
afraid of what the last of July and August will
bring if there is no rain.
Livestock Corrunission trading is fast.
Calves are selling earlier than they should.
Cows are being culled more closely than
usual, but this may be good for the long run.
Fat prices have fa llen the last two days to a
limit, which is not a good sign. Hay to this
point is approximately half-rolls to the acre
or less. Dairy production is down, which is
normal for this ti.tne of year, but production
is way off the norm.

Region 7-East Texas
Region 8-Central Texas
Leading nonheast Texas appraisers
appear to have redlined daily-related real
estate, limiting producers' opponunities to
upgrade operations-opponunities that are
presently quite favorable. Feed grain prices
continue to be favorable, but the '98 hay
crop may be history throughout this area.
Unseasonably hot temperatures are
taking a toll on poultry production. Overall
poultry flock quality is higher than last year.
Since March we have not received any
significant rain to suppott the fam1s and
ranches in our area. The spring 1998 hay
crop has been close to a 100 percent loss.
What little rain we have received has only
suppotted enough pasture growth to maintain our livestock. Since May tl1e grasshopper infestation has destroyed what
precious grass and other vegetation our
livestock depend on for grazing and shade.
Grasshoppers have destroyed vegetable
gardens and fruit orchards. Trees have been
harmed or killed. The pastures and hay
meadows have been harmed by what we
believe to be a pem1anent loss to the
existing root systems that suppott forage
growth for future beneficial use. The rowcrop farmers have lost 100 percent of their
grain crops, which will have a negative effect
on them as well as our ranchers. Stock water
is becoming dangerously low due to the
extreme heat and drought.
East Texas is hot and dry. Hay is almost
nonexistent. Lightweight calves as well as
heavy calves will probably be moved earlywithin the next 30 days-if tl1ere is no rain.
The conditions here are extremely dry.
There are no home gardens or small row

Some patts of our trade area have
received vi.ttually no rain in the last 100 days;
others have received enough to salvage 50
percent of a normal yield . It's raining
today-we shall see.
Fatm and ranch sales have slowed as
the drought worsens. If we don't get our
normal September ra ins, we could have
some "fire sale" trades of agricultural
prope1ties in tl1e fall .
The milo harvest is near completion.
Yields are a little better t:l1an expected. The
corn harvest is well under way--;-bushel
weights are low. Aflatoxin levels are
unpredictable. We will see carryover debt
after completion of this year. It will be more
difficult to refinance for the 1999 farm year.

Region 11-Trans-Pecos and Edwards
Plateau
Agricultural credit is under pressure,
with d1y conditions and low prices for cattle
and sheep. Our producers are surviving with
outside income.

Region 12-Southem New Mexico
Range conditions are very dry. Dryland
crops are in poor shape, and many did not
gem1inate due to no moisture. The wheat
crop was above average, but prices were
very low. Cattle prices are down due to dry
weather. ltTigated crops are below average
because dry conditions are so severe.