Full text of Agricultural Survey : Second Quarter 2000

View original document

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

STATISTICAL RELEASE

F E D E R A L

R E S E R V E

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

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

Demand for Loans
Sixty-three percent of responding banks
report no change in loan demand.
Percent
100

Second Quarter 2000

Quarterly Survey of
Agricultural Credit
Conditions is compiled from
a survey of Eleventh District
agricultural bankers. This
publication is prepared by

20
The Second Quarter Survey of Agricultural
Credit Conditions indicates continued improve0
ment in the Eleventh District. Survey respondents
01:'94
01 :'95
01 :'96
01 :'97
01 :'98
01 :'99
01 :'00
reported that the heavy rainfalls in May and June
Less
• Same
• Greater
did much to help allay drought conditions.
Bankers reported that cattle prices were high and Funds Available for Additional Lending
many farmers expected a bumper crop this year. Fourteen percent of respondents report
a decrease in the availability of funds for lending.
Some signs of concern are still evident though.
Percent
While spring rains were welcome, additional
100
moisture is needed to replenish irrigation wells
and get crops to harvest. Other concerns are that
80
sagging commodity prices and high gas prices
will again cause operating expenses to exceed
60
revenues. (See page 4 for bankers' comments.)

Here are additional details from the survey:

• The loan repayment rate is expected to
stay
strong in the near future. However, some
of Dallas and is available
lenders are reluctant to broker new crop loans
without charge by writing
because of widespread weakness in cotton and
to the Research Department, grain prices. Seventeen percent of responding
banks reported an increase in the rate of loan
Federal Reserve Bank of
repayment compared with last year. This is up
Dallas, P.O. Box 655906,
from the 12 percent that reported an increase
in the second quarter of 1999.
Dallas, TX 75265-5906,

the Federal Reserve Bank

or by telephoning
(214) 922-5254. It is
available on the web at
www.dallasfed.org.

For questions regarding
information in the release,
contact John Thompson,
(214) 922-5191.

• Land values edged a bit higher than
reported in the first quarter, with dryland values
climbing 0.7 percent, irrigated land values 1.9
perceiit and ranchland values 0.4 percent. Sixtyeight percent of responding banks expect land
values to remain stable over the next three
months.
• The typical fixed interest rate charged
on intermediate farm loans (one to seven years)
increased by more than 10 basis points, while
variable rates on intermediate loans rose by
almost 50 basis points.

0
01:'94

01 :'96

01 :'97

Less

Same

01 :'98

•

01 :'99

01 :'00

Greater

Rate of Loan Repayment
Loan repayment rates increase for
17 percent of second-quarter respondents.
Percent
100

o
01 :'94

(continued on page 4)

01 :'95

01 :'96

Less

01 :'97

•

Same

01 :'98

•

01 :'99

Greater

01 :'00

STATISTICAL RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Thirteen percent of respondents report
a decline in loan renewals or extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
60

Percent

- - - - - - - -- - -- - - - - - 65
40

55
20

50
0
01:"94

45
01 :'95

01 :'96

Less

01 :'97

•

Same

01 :'98

•

01 :'99

01 :'00

Actual Ratio

Greater

Amount of Collateral
The amount of collateral required
increases for 19 percent of banks.

35
Desired Ratio

1999:2

1999:3

1999:4

2000:1

2000:2

Percent
100

DISTRIBUTION OF LOAN - DEPOSIT RATIOS

Banks Reporting (Percent)
60

Ratio

1999
Jul. 1
Oct. 1

Jan. 1

2000
Apr. l

Jul. l

24
20
26
17
13

30
19
25
12
14

23
15
29
15
18

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

25
31
19
11
13

26
22
21
14
17

0
~~

Less

•

Same

•

INTEREST RATE-FIXED

Greater

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending increases
in the first quarter of 2000.
Millions of dollars (seasonally adjusted)
5,200
5,000

Average Rate (Percent)
Ratio

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

1999
Jul. 1
Oct. l

9.99
9.98
9.82
9.28

10.16
10.19
10.10
9.50

Jan. 1

2000
Apr. l

Jul. 1

10.39
10.46
10.13
9.59

10.56
10.61
10.51
9.86

10.98
10.84
10.66
10.16

4,800

INTEREST RATE-VARIABLE
4,600

Average Rate (Percent)
4.400
4,200
4,000
3,800 -+---.----.---.----,-.----.-------r---.----.---r---,-.----,------r--,
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00

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.

Ratio

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

1999
Jul. l
Oct. 1

9.65
9.84
9.71
9.17

10.06
10.17
10.01
9.47

2000
Jan. l

Apr. 1

Jul. 1

10.20
10.30
10.08
9.63

10.59
10.67
10.53
10.07

11.09
11.13
11.00
10.56

STATISTICAL RELEASE

CROPLAND-DRYLANO

Rural Real Estate Values
July 1, 2000

Region

' Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
• 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

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

109

610

0.7

6.6

TEXAS

101
13
16
6
9
8
17
4
10
6
5

610
313
326
314
409
597
918
658
1,179
785
493

0.9
4.1
0.0
1.0
- 0.5
2.4
0.1
1.4
0.1
4.4
- 2.4

7.1
7.7
0.5
0.8
5.9
6.8
13.7
-13.0
28.0
1.9
4.3

567

-1.7

4.2

5
3

656
252

- 0.4
- 15.5

1.6
2.4

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

CROPLAND-IRRIGATED

12
NE W

Average
Banks'
Value'
Second Quarter 2000

M EXI C O

Region

Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Timbers
6 North Central Texas
7 East Texas

1
2
3
4
5

8
9 Coastal Texas
10 South Texas

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

Average
Value'
Banks'
Second Quarter 2000

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

768

1.9

1.6

TEXAS

66
12
16
6
6
4
n.r.
3
6
n.r.
4

693
569
673
464
688
765
n.r.
703
1,768
n.r.
786

1.8
6.1
0.4
4.1
- 0.9
- 2.5
n.r.
3.3
0.4
n.r.
- 3.2

1.4
- 1.4
3.2
10.9
6.7
-4.3
n.r.
5.4
-3.8
n.r.
15.5

717

- 8.7

- 18.2

4
7

830
1,485

0.3
2.9

- 0.4
3.8

RANCHLAND
Region

Eleventh District Real Land Values
Land values continue to rise
in the second quarter of 2000.
1992 dollars per acre
1,600
1,400

1,200
1,000
800
600

400
200
0

Dry land

Ranch land

-------""

Average
Banks'
Value'
Second Quarter 2000

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

116

419

0.4

9.7

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

104
13
13
6
8
8
20
7
9
5
5

481
191
156
201
313
575
832
819
1,054
633
575

0.1
4.9
5.0
5.1
5.5
6.3
2.4
4.2
2.1
5.6
1.4

11.7
8.0
11.1
18.5
26.0
15.9
14.2
3.0
11.8
22.8
24.8

386

- 6.9

3.0

538
240

- 3.2
1.9

5.9
-0.4

~~~-~w~-~~--~~•w•••

Northern Louisiana
Southern New Mexico

4
8

STATISTICAL RELEASE

Row crops are very depressed in this
area. We are very selective with our crop
loans. Cattle prices are good, and we are
We currently have an excellent cotton
aggressive in this area. We have had good
crop started but will need more rain to carry rains, and the grass is good.
it to harvest. Although some counties are
wet, others sit in a dry area. Irrigation wells
Region 8-Central Texas
are holding but will need rain to recharge
before summer ends.
Agricultural prospects for the next
Moisture conditions are excellent, and
three years look great for our area . This is a
May and June rains created very little runtime for ranchers to heal wounds and build
District bankers were asked for any ad- off. Most cotton and peanut crops are up.
reserves. Higher interest rates will not help.
Some seedling disease in cotton has been
ditional comments concerning agricultural
Agricultural banks will need to keep rates
land values or credit conditions. These com- reported due to damp, cloudy conditions,
as low as possible, with or without help
but hot weather will take care of this.
ments have been edited.
from the Fed.
Double government payments saved
Region S-Cross Timbers
Region 1-Northern High Plains
the day in 1999. Loan deficiency payments
kicked in also, turning losses into profits .
Most wheat has been grazed. We are
Some farmers received 60 percent of their
Grain prices and the cost of gas for irristill dry-water is needed for stock ponds.
income from government programs.
gation are of major concern this crop seaCattle prices are good.
son. The cost of natural gas has more than
Generous rainfalls and good cattle
We had above-normal rain in June after prices have greatly enhanced the ability of
doubled since last season. That will cause
14 months of record dry weather. This area
large increases in fertilizer costs for next
ranchers to repay loans from operational
will produce an average hay crop; however, profits. Acre by acre, land is being taken
year. Crops are in good shape for fall prostock tank water is below normal going into out of agricultural production due to the
duction, but prices are below breakeven.
July and August.
subdivision of larger tracts of ranchland and
farmland .
Region 2-Southern High Plains

Second-Quarter
Comments

We expect more acres to be planted in
cotton and fewer in corn, peanuts and soy
grain. Rains have helped most farmers get
an earlier start. There has been some damage from high temperatures and high winds.
Farmers will receive a second production
flexibility contract check in September, which
will help offset a higher fuel cost of irrigation.
Price is still a big factor in the outcome of
this crop year.
June rains were excessive in some areas
but, overall, were extremely beneficial. With
timely additional rain, cotton crop prospects
are excellent, but price is still a major concern. It appears now that the expense to
produce the crop will again substantially
exceed the price received in most cases.

Region 4-Southern Low Plains

Region 6-North Central Texas

Crops look very good. The grain has
started to mature and looks to be above
average. Prices continue to decrease, which
is not good. There is great concern that
grain elevators will not have adequate storage for a bumper crop. Although pastures
are lush with grass, we still need a good
rain to fill tanks with a water supply adequate for the next two or three months of
summer. Cattle prices continue to be strong
in this area.

Region 7-East Texas
We got the rain, the grass is good, and
we are starting the second cutting of hay.
Calf prices are still good.

Region 10-South Texas

The grain sorghum harvest will be just
about finished by the end of June. Yields
have been average to good, and better
along the coast. Cotton and corn are making good progress. It appears that this is
going to be one of the earliest cotton crops
on record. Some producers are defoliating
cotton fields already, at the end of June.
Cattle prices at the auction barns
remain strong. Pasture conditions appear to
be holding but will need some relief soon.
High and dry weather is taking its toll on
pastures and grass, but this is good for the
cotton harvest.
Land prices appear to be holding
steady. Property around urban fringes con-

1---------- - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 tinues to command exceptional prices, and
demand is good.
Major concerns at this point are commodity prices. Low corn and cotton prices
(continued from page 1)
could create some repayment problems.

Agricultural Credit Conditions

• The number of farm and ranch
borrowers continued to increase, with
banks serving an average of 125 farmers and ranchers during the second
quarter, up from 106 in the second
quarter of 1999. However, the proportion of agricultural loans to total loan
portfolio was down from 30 percent in
the second quarter of 1999 to 27 percent in the second quarter of 2000.

• Fourteen percent of survey
respondents reported a decline in the
availability of funds during the second
quarter; this is up sharply from the 2
percent who reported a decline in the
second quarter of 1999.

Region 12-Southern New Mexico
Given the current prices for wheat,
milo and corn, operations are not feasible
if farmers do not receive emergency assistance from the U.S. Department of Agriculture. Without large government payments,
most medium-sized farms will not survive.
If there are wholesale liquidations, land
prices will drop drastically, as will the value
of farm equipment.

Full text of Agricultural Survey : Second Quarter 2000

FRASER