Full text of Agricultural Survey : Second Quarter 2009

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Ag r i c u lt u r a l S u rv e y

Quarterly Survey of Agricultural Credit Conditions in the Eleventh Federal Reserve District
Federal Reserve Bank of Dallas
Second Quarter 2009

Demand for Loans
A third of the respondents note a decline in loan demand.

Agricultural lenders responding to the second quarter survey
report that persistent drought conditions have increased strain on
the Eleventh District agricultural community. Ranchers in the driest
parts of the District are liquidating their cattle herds at a loss because
of limited water and forage availability and high supplemental feed
costs. The wheat harvest has been poor and most crops are suffering
from heat and lack of moisture.

Index
100
80
60
40
20
0
–20
–40
–60
–80
–100

1999

2000

2001

2002

2003

2004 2005

2006 2007

2008

2009

Funds Available for Additional Lending
Eighty-one percent of bankers report that fund availability remains
stable.
Index
100
80
60
40
20
0

Farmland sales continue to weaken, and a third of respondents
expect a decline in demand for farm real-estate loans over the next
three months. Sluggish sales activity has slowed land price appreciation. Dryland values held steady while irrigated land prices fell in the
second quarter. Four-fifths of respondents expect farmland prices
to remain stable in the near-term, while only 2.6 percent expect
increases—the lowest share since 1991.

Farm Lending Trends and Forecasts

–20
–40

What changes occurred in non-real estate farm loans at your bank in the past three
months compared with a year earlier?

–60
–80
–100

The dry spell has affected credit conditions in the District.
A higher share of bankers report lower incidence of loan repayment,
increased collateral requirements and greater demand for loan renewals compared with last year. Moreover, there is growing concern
among respondents about the future viability of some producers,
especially dairy farmers who have suffered large losses due to
record-low milk prices.

1999

2000

2001

2002

2003 2004

2005

2006 2007

2008

2009

Rate of Loan Repayment
Loan repayment rates held steady compared with last quarter but are
much lower than a year ago.

Demand for loans
Availability of funds
Rate of loan repayment
Loan renewals or extensions
Change in collateral required

2009:Q2
Index
–18.75
13.18
–19.24
13.82
16.04

Greater
14.29
16.09
2.05
18.87
16.45

Same
52.67
81.00
76.66
76.08
83.15

Less
33.04
2.91
21.29
5.05
0.41

2009:Q1
Index
–17.35
15.66
–20.35
20.51
19.56

Index

How do you expect the volume of farm loans made by your bank during the next three
months to compare with the volume of loans made during the same months a year ago?

100
80
60
40
20

Non-real estate farm loans
Feeder cattle loans
Dairy loans
Crop storage loans
Operating loans
Farm machinery loans
Farm real estate loans

0
–20
–40
–60
–80
–100

1999

2000

2001

2002

2003 2004

2005

2006 2007

2009:Q2
Index
-24.73
–31.04
–14.12
–6.77
–5.47
–30.32
–28.65

Greater
8.86
2.77
5.88
2.97
16.59
2.92
4.65

Same
57.55
63.41
74.12
87.29
61.35
63.84
62.05

Less
33.59
33.81
20.00
9.74
22.06
33.24
33.30

2009:Q1
Index
–19.48
–38.80
–13.79
–7.73
4.24
–31.30
–34.70

2008 2009

Survey responses are used to calculate an index for each question by subtracting the percentage reporting a decrease from the
percentage reporting an increase. When all respondents report
increased activity, an index will register 100. An index will register
–100 when all respondents report a decrease. An index will be zero
when the number of respondents reporting an increase or decrease
is equal.

Quarterly Survey 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 Public Affairs Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas,
TX 75265–5906, or by calling 214-922-5254. It is available on the web at
www.dallasfed.org.
For questions regarding information in the release, contact Laila Assanie, 214-922-5191.

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

Renewals or Extensions of Loans
Only 5 percent of bankers report a decline in loan renewals
and extensions.

Percent
75

Desired Ratio

Actual Ratio

70
65

Index

100

2008:Q2

2008:Q3

2008:Q4

2009:Q1

2009:Q2

–20

Distribution of Loan-to-Deposit Ratios

–40
–60
–80
–100

2008
1999

2000

2001

2002

2003 2004

2005

2006 2007

2008

2009

Jul. 1

Oct.1

Jan. 1

Apr. 1

Jul. 1

24
10
15
18
32

16
12
15
25
33

21
12
20
19
29

23
17
17
18
26

20
11
19
18
33

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

Amount of Collateral
Collateral requirements are unchanged from the previous
quarter, say 83 percent of respondents.

Interest Rates

Index
100

Fixed

Average Rate (percent)

2008

40
20
0
–40
–60
–80
1999

2000

2001

2002

2003 2004

2005

2006 2007

2008

2009

Oct. 1

Jan. 1

Apr. 1

Jul. 1

7.52
7.81
7.63
7.20

7.42
7.56
7.49
6.87

6.86
6.90
7.23
6.77

6.89
7.20
7.16
6.79

7.01
7.05
7.04
6.98

6.96
7.09
6.91
6.54

6.78
6.91
6.99
6.63

6.29
6.40
6.57
6.24

6.25
6.28
6.35
6.11

6.19
6.23
6.26
6.01

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

Anticipated Trend in Farmland Values
Seventeen percent of bankers expect farmland values to fall
over the next three months, down from 29 percent last quarter.
Index

2009

Jul. 1
Feeder cattle
Other farm operating
Intermediate term
Long-term farm real estate

–20

–100

2009

Total Agricultural Loans
Agricultural loan volumes continued to expand in the first quarter of 2009.

100
80
60

Millions of dollars (seasonally adjusted)

7,800

7,400

7,000

–20

6,600

–40

6,200

–60

5,800

–80
–100

5,400
1999

2000

2001

2002

2003 2004

2005

2006 2007

2008

2009

5,000
4,600
4,200
3,800
1999

Ag r i c u lt u r a l S u rv e y

Second Quarter 2009

2000

2001

2002

2003

2004

2005

2006

2007

2008

Federal Reserve Bank of Dallas

2009

Rural Real Estate Values — July 2009
Cropland—Dryland

Eleventh Federal Reserve District
1

District
3

12
N E W

M E X I C O

L O U I S I A N A

6
11

T E X A S

2000 dollars per acre
80
70

Irrigated

60
50
40

Dryland

30
20
Ranchland

10
2000

2001

2002

2003 2004

2005

2006 2007

2008

2009

Real Land Values
Ranchland values rose while dryland values were flat in the
second quarter.
2000 dollars per acre
1400
Irrigated

1200
1000
800
Dryland

600

Ranchland

400

1
2
3
4
5
6
7
8
9
10
11
12
13

1
2
3
4
5
6
7
8
9
10
11
12
13
1

2000

2001

Previous
Quarter
0

Previous
Year
3.7

113
20
10
8
12
11
12
6
17
8
n.a.
8
7
6

1,351
467
490
543
774
1,344
2,239
1,776
2,738
1,448
n.a.
1,036
451
1,294

0.3
1.2
0.1
–0.8
2.6
6.2
–2.1
3.2
0.1
1.2
n.a.
–6.5
–4.8
–3.7

3.7
4.3
–0.5
–3.5
–5.8
0.8
1.8
14.2
9.8
–10.7
n.a.
–5.0
17.1
3.5

1,417

–1.0

4.8

78
19
10
6
9
5
n.a.
4
11
6
n.a.
7
8
6

1,335
1,055
1,068
966
1,196
2,204
n.a.
1,740
2,930
1,582
n.a.
2,062
2,123
1,675

0.6
–1.1
2.7
–1.6
1.1
2.8
n.a.
2.5
0
5.8
n.a.
–0.8
–9.9
–1.7

2.3
–2.2
4.0
2.3
–3.6
–2.1
n.a.
13.3
–1.4
–10.0
n.a.
3.6
23.9
1.8

District

132

1,145

1.1

–0.5

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
Southern New Mexico
Northern Louisiana

120
19
8
8
11
12
14
8
18
7
n.a.
14
7
5

1,471
372
395
589
791
1,751
2,356
1,752
3,345
1,230
n.a.
1,342
211
996

1.2
–0.6
–9.6
0.7
0.3
–0.7
–1.9
1.4
0.4
–1.4
n.a.
1.9
–0.6
2.6

1.8
3.7
–0.1
–0.4
–1.9
–4.0
0.6
–3.9
1.1
–15.1
n.a.
2.0
–31.6
4.1

2002

2003 2004

2005

2006 2007

2008

Ag r i c u lt u r a l S u rv e y

2009

Ranchland

200
1999

District

Cash rents for dryland and ranchland held steady in second
quarter 2009.

1999

1
2
3
4
5
6
7
8
9
10
11
12
13

Percent Change3
in Value from

Cropland—Irrigated

Real Cash Rents

Average
Value2
Banks1
Second Quarter 2009
126
1,339

Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation.
n.a.—Not published due to insufficient responses but
included in totals for Texas and district.

Second Quarter 2009

Federal Reserve Bank of Dallas

Quarterly Comments
District bankers were asked for
additional comments concerning agricultural land values and credit conditions. These comments have been
edited.
Region 1—Northern High Plains
A cooler than normal early growing season has the cotton crop off
to a poor start. The wheat harvest is
wrapping up with very poor yields
due to dry growing conditions.
Dairymen and cattle feeders continue
to face extremely difficult economics.
One bright spot is the opportunity
corn growers have to be profitable in
2009.
Increased FDIC assessments will
probably drive up interest rates on
loans.
Region 2—Southern High Plains
Conservation Reserve Program
contracts that are expiring in 2009
and are not being renewed will have
a negative impact on farm real estate
values.
Region 3—Northern Low Plains
Most of the cotton has been
planted. Current moisture conditions
are good.
Rains have been intermittent.
Pasture conditions are generally
good. There is a lot of real estate on
the market but very little is selling.
Region 4—Southern Low Plains
We remain in a drought. Recent
rains will enable farmers to plant, but
rainfall levels are still 2 inches below
normal.
Our farmers and ranchers are suffering from the drought as well as
high input costs. Only the big farmers remain in business; the family
farmer does not have enough acreage to spread the fixed costs over.

Ag r i c u lt u r a l S u rv e y

Region 5—Cross Timbers
We have had very few ag land
sales since the first of the year. Very
little wheat was harvested this year,
and what was harvested averaged
15–18 bushels per acre.
We have had decent rains over
most of the area in recent weeks, but
some lakes and ponds are still low.
Pastures are in fairly good shape.
Hay production is good so far, with
lower fertilizer and fuel costs helping. Cattle prices are softening. The
dairy business is the worst it has ever
been due to prolonged record-low
milk prices. Several dairies in the
area have gone out of business, and
more will likely follow in the next
few months.
We have had very little rain in the
past 90 days. Hay is planted, but it
needs rain to make. Stock tanks are
either half full or completely dry.
Region 6—North Central Texas

completed their first cutting of hay
with weak to fair yields. The biggest concern is cattle prices trending
downwards. This will not help the
cash-strapped producers.
Nonirrigated crops are being hurt
by dry conditions. Hay yields may be
low again.
To sum it up in one word—
DROUGHT! We anticipate large sales
or liquidation of cattle herds. We
have not had an appreciable amount
of hay since 2007. Cattle prices are
sinking fast.
Mixed weather, heavy rain and
drought, has left the dryland cotton
crop in huge peril. Crop estimates
are too high and are pressuring cotton prices down. The late freeze
lowered wheat crop yields by 65–80
percent.
Region 11—Trans-Pecos and Edwards
Plateau

The drought returned quickly
and there is no rain in the forecast.
Pastures are already stressed from
the heat. Grain and corn yields will
be lower than average.
We are hoping crop insurance
companies are ready.
The area is in need of rainfall.
Early rains have helped pastures and
the hay crop, which is being cut at
the present time.
One hundred thirteen acres with
a nice home recently sold for $2,330
per acre.
Dry weather is hurting crops and
pastures.

Recent heavy rains have led to
good pasture conditions. High feed
prices and economic uncertainty
will likely cause producers to take a
“wait and see” approach. However,
the gradual increase of oil and gas
prices may lead to an increase in
herd sizes.
After receiving good rains in April
and early May, South Central Texas
(the Edwards Plateau) is now back
in hot and dry conditions. July never
promises much in the way of moisture, and so far it looks like it will
be a hot and dry summer. Livestock
prices are still pretty good, but will
be very much impacted by the
weather.

Region 8—Central Texas

Region 12—Southern New Mexico

Dry weather patterns are keeping the grass short. Some producers
will have to begin feeding again.
Operational expenses remain elevated.
Rains have helped out in most
areas, but the continued heat and
lack of rain so far in June is not encouraging. Most people have just

The dairy crisis is beginning to be
a major concern. Most dairy farmers finance with farm credit. Current
conditions are beginning to affect the
farmers’ ability to purchase land and
feed inputs, which is having an impact on our local providers.

Second Quarter 2009

Federal Reserve Bank of Dallas

Full text of Agricultural Survey : Second Quarter 2009

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