Full text of Agricultural Survey : Second Quarter 1999

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STATISTICAL

F E D E R A L

R E S E R V E

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 Agricultural
Credit Conditions in the
Eleventh Federal Reserve District

Demand for Loans
Twenty-three percent of responding banks
report a decrease in the demand for loans.
Percent
100

80

Second Quarter 1999

60

40

20

Quarterly Survey of
Agricultural Credit
Conditions is compiled from

The Second Quarter Survey of Agricultural
Credit Conditions showed some improvement
for farmers and agricultural bankers. The
number of bankers reporting a lower rate of
loan repayment and more loan renewals and
extensions, although still substantial, decreased
during the quarter. Bankers report that disaster
payments have helped some farmers start to
recover from last year's drought-related losses,
but many bankers are concerned that low crop
prices will cause further losses this year (see
page 4 for bankers' comments.)

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,
Federal Reserve Bank of
Dallas, P.O. Box 655906,

(214) 922-5254. It is
available on the web at

information in the release,

01 :'95

Less

01 :'96

• Same

01:'97

0 1:'98

0 1:'99

• Greater

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

80

60

40

• Twenty-six percent of Eleventh District
bankers report a decline in the rate of loan
repayment in the second quarter, compared
with second quarter 1998. At least half the
responding bankers in the Northern High Plains,
New Mexico and Louisiana reported declines in
the rate of loan repayment in the second
quarter, compared with the same period a year
earlier.
• The average number of farm and ranch
borrowers per responding bank, which had
been falling for more than a year to 85 at the
end of last year, rose in the first half of this year
to 103.

<www .dallasfed.org>.

For questions regarding

0 1:'94

Here are additional details from the survey:

Dallas, TX 75265-5906,
or by telephoning

0
01:'93

20

0
ill~

ill~

ill~

Less

ill ~

•Same

ill~

ill ~

ill~

• Greater

Rate of Loan Repayment
The rate of loan repayment decreases for
26 percent of second-quarter respondents.
Percent
100

80

60

• Interest rates for long-term farm real
estate loans increased about 10 basis points over
the quarter.

40

20

contact Sheila Dolmas,
(214) 922-5191.

0
01:'93

01:'94

0 1:'95

Less

0 1:'96

•Same

0 1:'97

• Greater

0 1:'98

01:'99

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Thirty-one percent of respondents report
increases in loan renewals or extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

BO

Average actual and desired ratios
60

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

55

60

40

55
20

0
01 :'93

50

01 :'94

01 :'95

Less

01 :'96

• Same

01 :'97

01 :'9B

01 :'99

• Greater

Amount of Collateral
Twenty-six percent of respondents report an
increase in collateral requirements.

45

II

Actual Ratio

II

Desired Ratio

40
35
1998:2

1998:3

1998:4

1999:1

1999:2

Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

80

Banks Reporting (Percent)
60

Ratio

1998
J ul. 1
Oct. 1

Jan. 1

1999
Apr. 1

Jul . 1

26
16
27
20
11

28
19
25
12
16

25
30
20
12
13

40

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

20

27
16
25
21
13

24
22
18
20
16

0
~~

~~

~~

Less

~~

• Same

~~

~~

~~

• Greater

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending picks up in first quarter 1999.
Millions of dollars (seasonally adjusted)
5,200
5,000

INTEREST RA TES- FIXED
Average Rate (Percent)
Ratio

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

1998
Jul. 1
Oct. 1

Jan. 1

1999
Apr. 1

Jul. 1

10.41
10.52
10.15
9.56

9.94
10.08
9.88
9.29

9.91
9.99
9.75
9.18

9.96
9.96
9.80
9.28

10.31
10.37
10.23
9.63

4.BOO

INTEREST RATES-VARIABLE

4,600

Average Rate (Percent)

4,400
4,200

Ratio

4,000

'B6 'B7 'BB 'B9 '90 '91

'92 '93 '94 '95 '96 '97 '9B '99

Note: Starting in May 1998, data previously reported by NationsBank of
Texas in the Eleventh District are reported by Bank of America in the
Fifth District.

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

1998
Jul. 1
Oct. 1

10.39
10.53
10.28
9.80

10.21
10.31
10.24
9.68

Jan.1

1999
Apr. 1

Jul. 1

9.78
9.92
9.73
9.19

9.75
9.94
9.73
9.15

9.75
9.87
9.70
9.24

STATISTICAL

RELEASE

CROPLANO-ORYLAND

Rural Real Estate values
July 1, 1999

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
and varying number of reporting banks
should be used with caution.
All figures are preliminary.

Beventh Federal Reserve District

116

597

2.5

4.3

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross limbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

108
13
20
8
11
7
17
5
11
5
4

597
293
328
320
391
547
838
836
1,027
802
454

2.6
-0.9
-2.1
0.8
-1.5
0.3
1.5
19.1
- 2.4
3.0
-1.9

5.3
9.6
- 1.4
2.7
-6.3
- 0.2
-10.2
54.3
9.6
5.2
- 0.3

7

584

4.5

2.9

5
3

642
245

1.4
2.8

-3.7
-33.3

CROPLAND-IRRIGATED

12
MEXICO

Region

Northern High Plains
2 Southern High Plains
3 Northern Low Plains
4 Southern Low Plains
5 Cross Timbers
6 North Central Texas
7 East Texas

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

Northern Louisiana
Southern New Mexico

NEW

Average
Value2
Banks'
Second Quarter 1999

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

Average
Banks'
Value2
Second Quarter 1999

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

80

759

-2.6

0.4

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Tunbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

69
12
19
5
8
3
1
3
7
n.r.
3

697
597
659
415
662
762
1,604
667
1,963
n.r.
667

-0.6
2.7
-0.4
0.8
-0.1
-1.7
39.5
8.2
3.4
n.r.
-2.8

2.6
11.3
1.3
-8.1
0.6
5.2
85.1
14.3
8.1
n.r.
2.8

8

871

-0.8

-37.1

Northern Louisiana
Southern New Mexico

5
6

844
1,311

2.9
-13.4

-3.8
-10.9

RANCHLAND

Eleventh District Real Land Values
Irrigated and ranch/and values fall, while dry/and
values increase in the first half of 1999.
1992 dollars per acre
1,600
1,400
1,200
1,000
800

--"

600
400
200
0

"

Dryland

_,

Ranchland

~u~euwua~~••M%•W~w

Region

Average
Value2
Banks'
Second Quarter 1999

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

119

370

-5.3

4.5

TEXAS
Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Tunbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
Trans-Pecos and
Edwards Plateau

110
12
16
7
10
8
19
8
12
4
4

431
173
138
172
247
506
729
826
1,129
553

444

-1.3
-5.2
1.3
0.3
-3.6
4.4
0.7
10.8
1.2
3.9
-2.2

-0.1
8.9
-0.5
10.2
1.3
5.7
-12.9
22.1
24.2
-16.7
-1.9

10

343

-7.4

-9.4

3
6

508
193

7.0
-24.9

24.5
47.1

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.

Region I-Northern High Plains
We had two plans this year: Plan A, rent
additional land, no-till fence to fence, shoot
for 90 bushels of wheat, double the crop to
pay loans and bank on good weather. Plan B,
buy lottery tickets. We'll let you know next
quarter how we are progressing.
Government funding of farm programs
was a big help for our farmers.

RELEASE

in place of borrowing to meet operating
expenses. Crops are varied due to recent
weather conditions. A significant number of
farmers lost their cotton crop and have
replanted milo, sunflowers, etc. This could be
a very challenging year because of weatherrelated adversity and depressed commodity
prices. Government help appears to be a must
for many farmers to continue in business.
Farmers are frustrated ; they would rather have
the crops and prices without the government
assistance.

Region 4-Southern Low Plains
Moisture conditions are good. Cotton and
peanut crop outlooks are good.

Region 5-Cross Timbers
Even though we are 90 miles from the
[Dallas/Fort Worth] metroplex, hunting has
contributed to a $50-$100-per-acre increase in
land prices.

Region 6-North Central Texas
Region 2-Southern High Plains
The recent disaster payments have put
farmers in better condition from 1998 losses
and low prices. However, the amount of
damage from recent excess rain, hail and
wind will be decided later. We know there
will be insurance claims, but the net effect is
not known for the 1999 crop. Without price
stabilization, farmers may be better off if their
cotton crops are destroyed.
Cotton crops are approximately 2-3 weeks
late in maturing because of adverse weather
and replanting. Low prices have also
contributed to farmers' decisions not to push
crops. Peanuts are excellent due to adequate
moisture. Wheat yields are above average.
Margins in cattle loans have increased due to
slight upswings in prices. FSA disaster
payments have helped the dryland farmers
who had small carryovers; however, irrigated
farmers did not receive much help. Cattlemen
received almost no help; they took the brunt
of poor prices and, in some cases, up to
three-year-long dry conditions. Low
commodity prices still appear to be the major
problem in the agricultural sector. The farm
bill needs to be rewritten in the worst way to
help our nation's agricultural economy.
Recent reductions in agricultural loan
portfolio amounts are due to the application
of larger-than-expected FSA disaster payments
to loans and the use of FSA disaster payments

Land values continue to increase, d riven
by the development and growth of Williamson
and surrounding counties. Crops are the best
in many years, and yields will be above
average. Rain has come at the right times after
planting. There is an abundance of hay,
pastures are green and cattle are fat. Farmers
have used the disaster payments they received
in June to reduce debt or pay expenses,
reducing the amount needed for operating
expenses.
It will be good to produce a good crop,
but price continues to be a major factor as far
as being profitable. Farmers cannot continue
to break even or lose money. Equipment is
worn out and needs to be replaced. With
overproduction and limited demand, this
problem is not going to change. There will
have to be a reduction in planted acres over
coming years to increase prices.
Current weather conditions are favorable
for the overall outlook for our farm/ranch
customers. Grain prices continue to look
bleak, with government aid a must for positive
cash flow. Going into July, 1999 looks much
more favorable for cow/calf producers than
1998.

Region 7-East Texas
There is adequate soil moisture; hay and
crops appear good. Input costs (feed) are

cheap, allowing profit margins for the dairy
industry. Beef prices are stable; the broiler
industry is as usual.

Region 8-Central Texas
Demand for weekend retreats is d riving
land values very high. Rains have benefited
most producers; however, some dry pockets
still exist.

Region 11-Trans-Pecos and
Edwards Plateau
A rapid increase in irrigated farmland
prices has been fue led by Edwards Aquifer
wate r speculators and not by farmers . Hunting
properties are also at a premium.
Ra ins have continued, and feed is the best
it has been for several years. Livestock
markets continue to be low, and operations
still need o utside income to continue.

Region 13-Northern Louisiana
This area was severely affected by the
1998 disaster and crop prices. As a result, a
majority of the fa rmers had to seek loan
assistance from FSA. This overwhelmed the
agency and caused processing and funding
delays. A large number of farmers were not
funded and could not farm, which landlords
found out at planting time. Faced with
obtaining new farmers, landlords were left
without any bargaining power on rental rates.
In a large number of cases the land was
leased "rent free" just so it would be mainta ined; about an equal amount of land was
not leased at all. Whe n a market study on
rental rates is completed, these "late season"
developments will affect the rental market
average. Land sales have been slow and
sporadic. Per-acre sale prices appear stable.

Federal Reserve Bank of Dallas
Web Site

-

·- ·

..

,.,~~
··· ~·~·'The Eco'h.,,.O'my ;~ Action
" -"
To find economic data,
banking research and
other useful information ,
visit the Dallas Fed web site:

www.dallasfed.org