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Second Quarter 2016

DALLASFED

Agricultural
Survey

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

Survey
Highlights

B

ankers responding to the secondquarter survey continued to report
concern for producers’ financial
positions due to low commodity
prices and high production costs. Wheat
harvest has been disrupted in a number of
regions due to weather, including rain and
hail. A few bankers noted some relief for
cotton producers with the recently passed
Cotton Ginning Cost Share program.
Although cattle prices were lower, grazing
conditions were good across regions.
District cropland values increased this
quarter. Real irrigated land values rose 4.7
percent over last quarter, and real dryland
values were up 2.3 percent. Ranchland
values were mostly unchanged again this
quarter (Figure 2). However, according to
bankers who responded both this quarter
and in second quarter 2015, ranchland
and dryland values increased year over
year, while irrigated land values declined
slightly (Table 1).
The anticipated trend in farmland
values index remained negative for a
fourth consecutive quarter, suggesting respondents expect farmland values to trend
down in the coming months. The credit
standards index indicated continued tightening of standards; no bankers reported
loosening standards this quarter, but the
vast majority of respondents continued to
note no change (Figure 4).
Demand for agricultural loans decreased for a third consecutive quarter.
Loan renewals and extensions picked
up as loan repayment rates continued to
decline. Overall, the volume of non-realestate farm loans was lower than a year
ago. Operating loans continued to increase
year over year; all other loan categories
fell in volume year over year this quarter
(Figure 1).

Figure 1

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

Percent reporting, Q2

2016:Q1

2016:Q2

pGreater

Same

qLess

–1.5

–3.9

18.3

59.5

22.2

6.9

3.4

8.7

86.0

5.3

–33.9

–28.2

3.2

65.3

31.5

24.0

25.0

29.0

66.9

4.0

Demand for loans*
Availability of funds*
Rate of loan repayment
Loan renewals or extensions
Index

Availability of funds*

50
40

Loan renewals
or extensions

30
Rate of loan repayment

20
10
0
–10
–20
–30

Demand for loans*

–40
–50

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

What changes occurred in the volume of farm loans made by your bank in the past three months
compared with a year earlier?
Index

Percent reporting, Q2

2016:Q1

2016:Q2

pGreater

Same

qLess

0.0

–8.1

16.1

59.7

24.2

Feeder cattle loans*

–31.4

–31.1

3.7

61.5

34.8

Dairy loans*

–17.1

–11.6

4.1

80.2

15.7

Crop storage loans*

–10.4

–14.3

3.2

79.3

17.5

5.7

5.7

21.0

63.7

15.3

Farm machinery loans*

–28.5

–24.3

7.9

59.9

32.2

Farm real estate loans*

–25.0

–24.2

4.0

67.8

28.2

Non-real-estate farm loans

Operating loans

*Seasonally adjusted.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

} Quarterly Comments
District bankers were asked for additional comments concerning
agricultural land values and credit conditions. These comments
have been edited for publication.
Region 1 • Northern High Plains

XXLow commodity prices continue to hamper our farmers
and projected cash flows. The lack of rain in our area has
not helped either, as some farmers are contemplating
whether or not to farm as much as they have done in the
past, which would put a strain on our loans.

XXLand values remain stable despite less-favorable operating profit margins. This is due to demand for land being
greater than the limited amount of land on the market for
sale in our area. Weather has been ideal for planting of
fall crops; however, higher-cost input crops such as irrigated corn may see less acreage due to initial projected
poor economics. Lower cattle prices continue to impact
the viability of cattle ownership by many, especially for
smaller operators. 2016 remains a year of being cautious
and seeking alternatives to traditional operations.

XXMoisture is good. Our year-to-date totals are higher

than the three-year period from 2011–13. Summer
grazing conditions are exceptional. The wheat crop looks
good, although it has sustained some hail damage. Some
of the corn and most of the cotton had to be replanted
due to rains. Feedlot cattle are still suffering large losses.

XXAlong with timely rain is crop-damaging hail.
XXFor several years, producers were able to compensate
for poor cotton and grain prices with cattle profits. Given
the current prices for all of the above, with no improvement, a shakeout among producers is likely in the near
future.

Region 2 • Southern High Plains

XXA better farm bill is needed to provide a safety net for

producers. The ginning cost-share program just approved
will definitely help our cotton farmers and is very much
needed. Commodity prices need to improve as do cattle
prices. We are thankful for the timely rains we have
received in the past couple of months.

XXFarm income will be challenged for 2016 crops. Simply
put, the costs of production are well above the current
market prices for almost all crops. As such, farmers are
currently projecting losses for the year. Farmers with leverage will have a hard time surviving currently projected
losses.

XXIt was a challenging renewal season. We were unable

to continue to provide operating financing for several
customers. Access to Farm Service Agency guarantees
was constrained as their underwriting guidelines don’t
match with the reality of low commodity prices. Bankruptcies and voluntary liquidations have been the highest in
many years. Surprisingly, farmland values are holding
steady, but most market participants doubt this will last
if prices don’t reverse their decline. Stocker and feeder
cattle operators continue to bleed red ink; gains from
2014 have all been given back, plus some, as immense
equity has been lost within this industry. The crop outlook
for the South Plains is decent. Most areas have favorable
moisture conditions, but cold, wet weather has caused
delays in getting cotton in. The wheat crop looks pretty

good, but prices and the basis are horrible. Rebounding
corn prices are an encouragement. The just-announced
cotton ginning support program will give some cotton
producers a shot in the arm, although the $40,000 payment limit hurts. So, things are about the same: Everyone
is in survival mode.

12
N E W

M E X I C O

Regions of the Eleventh
Federal Reserve District

Region 3 • Northern Low Plains

XXLow commodity prices are stressing cash flows, and

repayment rates have slowed on stocker lines due to
a significant reduction in the price of cattle. Crops and
pastures are currently in good condition. Wheat is being
harvested. Dryland yields have been better than normal
on harvested acres.

XXWheat harvest started with average yields and poor

prices but stalled due to heavy rain. Very little wheat was
grazed out this year. Most farmers are in a perfect storm
where they will cut bushels just above the multiple peril
crop insurance quantity and sell for a low price.

Region 4 • Southern Low Plains

XXAgriculture looks bleak for the next few years. Over-

regulation and government manipulation of markets are
killing America.

XXRecent rains have improved cotton crop prospects.

Planting is full speed. No grain sorghum is being planted
due to aphids. Wheat harvest has been disrupted due to
rains; some field grain is sprouting in the head. Stocker
cattle operators have lost a large amount of collateral
margin due to lower cattle prices. Cow-calf operators are
seeing a drop in collateral and cash flow margins due to
the drop in calf prices.

XXDryland cotton is a crop of the past. It cannot keep up

with the living expenses or the cost of equipment and
technology involved in the initial seed expense. It is time
to move on to something productive. The assistance for
ginning expenses is just a token offering, yet it is more
than we should realistically expect to receive for the
cotton farmer. Let’s move on to something sustainable—
even if we have to reduce our standard of living some.
Insurance and government payments are not the answer.

Region 5 • Cross Timbers

XXLand sales continue at a very moderate pace with

steady values. An abundance of rain in recent weeks has
led to all lakes and ponds being full and even some flooding. Grazing conditions and hay production are and will
be very good. Lower prices for calves and yearlings are
affecting beef cattle producers’ incomes. Milk prices are
down to or below breakeven, so dairymen are also being
squeezed again.

XXWe finally received 15-plus inches of rain in May and

the first week in June, and 100 percent of all stock tanks
are full, plus our area lake that feeds 150,000 people is
full. It was down to 12 percent capacity a year ago. Farmers are waiting for fields to dry to start farming.

Agricultural Survey • Second Quarter 2016 • Federal Reserve Bank of Dallas

Region 6 • North Central Texas

XXCattle prices are still down from a year ago. We have

been deluged with heavy rainfall, and our farmers should
be on the second or third cutting of hay but most are on
the first.

XXWe have had a few farmers with carryovers from last

year who have requested additional funds to cover the
carryover plus operation cost this year. Last year, our area
had extensive rain and flooding, which drastically reduced
production. For the most part, we have used the same
analysis policies whether it’s a good time or bad time,
which helps keep our ag loans constant.

XXThe cattle market has softened, which has primarily
hurt the stocker calf prices.

Region 7 • East Texas

XXThere seems to be some positive movement in farm

real estate in East Texas—mostly for smaller tracts of less
than 100 acres. There have not been any major price fluctuations in cost per acre, and demand may be increasing
slightly, but not enough to say it is an upward trend. Cattle
prices have dropped but are still favorable enough to be
profitable at this time. We have had no adverse situations
resulting from lower cattle prices.

XXCattle loans have slowed considerably with the recent

cattle market downturn. Real estate loans have slowed,
with very little land moving at this time. Crops that withstood the recent floods look very good. Pasture conditions
are very good to excellent.

Region 8 • Central Texas

XXWe have had plenty of rain over the past few months.

Most crops are in good shape, and pasture land is in excellent shape, with the best spring in many years. There’s
lots of hay to be made once it dries out enough to get into
fields. Cattle prices have remained fairly stable the past
few weeks and will hopefully hold at the current prices
through the summer months. We are starting to see more
for-sale signs on residential and farm and ranch property
in the area, due to the slowdown in oil and gas activity and
the number of layoffs starting to impact area economies.
Sales tax numbers have also been down for area towns,
and we are starting to see an inventory of homes on the
market exceeding 90 days.

Table 1

Rural Real Estate Values—Second Quarter 2016

1

Banks1

3

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

2

4

L O U I S I A N A

5
6

11

7

T E X A S

8

13

94

1,792

4.3

Texas*
1 Northern High Plains

79
12

1,822
848

5.0
6.4

2 Southern High Plains

7

664

–2.6

3 Northern Low Plains*

7

808

2.8

4 Southern Low Plains*

8

1,242

27.6

5 Cross Timbers

9

10

4

1,425

–2.6

15

2,723

6.4

7 East Texas*

7

2,648

0.0

8 Central Texas

7

3,507

6.6

9 Coastal Texas

4

2,613

3.9

n.a.

n.a.

n.a.

6

1,892

6.1

4
11

325
2,314

0.0
–7.3

6 North Central Texas

10 South Texas
11 Trans-Pecos and Edwards Plateau
12 Southern New Mexico

XXThe deluge of rain in excess of 15 inches in parts of our

trade area will put additional operational costs into play:
replacing fencing, repairing erosion and replacing lost
livestock, to mention a few. Hay making may be postponed
until July. Many meadows have not yet been cut.

Region 9 • Coastal Texas

XXMoisture conditions have been adequate to excessive

in some areas. Crops managed to sustain their potential,
with some damage in some areas due to winds, flooding,
hail and bug pressure. Pastures are in good shape, with
worming and fly pressure being high. Good management
practices with livestock are needed to maintain optimal
growth of calves heading into summer. Prices have still
maintained some stability, with grain providing resistance
with recent increases. Some reestablishment or replacement of cattle has occurred in the area, with lowered
replacement prices and relatively good calf prices. Grain
sorghum harvest should be starting soon. Cotton is growing with ample moisture. The areas with too much rain
have lost some bolls, and the plant is trying to reestablish
blooms and new bolls. Corn had good moisture with some
dry times in April that put stress on the plant. Overall, most
crops should be harvested on time, weather permitting.
Grain and cotton prices have been on the upside, with
factors across the nation, South America and other areas
showing lower production or increased demand for grain,
beans and cotton. Overall, the potential of having a good
crop this year is very possible, but we still have variables
that may affect overall production, quality, price and
income. The cattle markets have still been steady with
good prices. Feed usage has also been up and may affect
the feeders placed in feed and overall pricing.

Region 11 • Trans-Pecos and
Edwards Plateau

XXThe recent heavy rains have created harvest issues for
many of the area wheat farmers.

XXCattle prices have softened considerably over the past
90 days. Sheep and goat markets have remained pretty
steady. Things in general are pretty positive over much of
the Edwards Plateau.

XXOur area had very good rainfall. The cattle market
remains soft.

13 Northern Louisiana

Cropland—Irrigated
District*

69

2,351

–1.0

Texas*
1 Northern High Plains

52

2,087

–1.0

12

1,944

–1.9

2 Southern High Plains

6

1,392

–4.7

3 Northern Low Plains*

4

1,564

1.6

4 Southern Low Plains

8

1,588

17.6

5 Cross Timbers

n.a.

n.a.

n.a.

6 North Central Texas

n.a.

n.a.

n.a.

7 East Texas

4

2,925

–8.8

8 Central Texas

4

3,375

0.0

9 Coastal Texas

3

2,983

0.0

n.a.

n.a.

n.a.

11 Trans-Pecos and Edwards Plateau

5

3,180

2.5

12 Southern New Mexico

6

3,817

–1.4

11

3,441

–1.2

103
88

1,640
1,956

1.5
1.5

10 South Texas

13 Northern Louisiana

Ranchland
District*
Texas*
1 Northern High Plains

11

589

4.2

2 Southern High Plains

5

690

–5.5

3 Northern Low Plains

7

857

8.3

4 Southern Low Plains*

9

1,214

18.8

6
16

1,658
2,619

5.2
11.9

7 East Texas

9

2,861

–2.9

8 Central Texas

8

4,563

1.8

9 Coastal Texas

3

2,450

1.1

n.a.

n.a.

n.a.

12

1,617

–2.0

5

270

2.2

10

2,040

–3.0

5 Cross Timbers
6 North Central Texas

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

*Seasonally adjusted.
1
Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation and calculated using responses only from those banks reporting in
both the past and current quarter.
n.a.—Not published due to insufficient responses but included in totals for Texas and district.

Agricultural Survey • Second Quarter 2016 • Federal Reserve Bank of Dallas

Figure 3

Figure 2

Real Cash Rents

Real Land Values
2005 dollars per acre
2,200

2005 dollars per acre per year

Irrigated

120

2,000

Irrigated

50

1,800
1,600

Ranchland

1,400
1,200

100

40

80

Dryland

30

Dryland

1,000

2005 dollars per acre per year

60

800

60

20

600

40
Ranchland

400

10

20

200
0

0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

0

NOTE: All values have been seasonally adjusted.

NOTE: All values have been seasonally adjusted.

Table 2

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Figure 4
Anticipated Farmland Values and Credit Standards

Interest Rates by Loan Type
Long-term farm real estate

Intermediate term

Other farm operating

Feeder cattle

What trend in farmland values do you expect in your area in the next three months?

Fixed (average rate, percent)

Index
Anticipated trend in farmland
values*

Percent reporting, Q2

2016:Q1

2016:Q2

pUp

Stable

qDown

–18.9

–5.7

7.8

78.7

13.5

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
Credit standards

2016:Q1

2016:Q2

pTightened

Same

qLoosened

15.5

18.4

18.4

81.6

0.0

Index
50

2015:Q2

5.93

6.04

5.93

5.74

Q3

6.03

6.16

6.05

5.79

Q4

6.04

6.08

5.93

5.67

20

2016:Q1

6.07

6.11

6.09

5.81

10

Q2

6.08

6.19

6.07

5.82

40
30
Credit standards †

0
–10

Anticipated trend
in farmland values*

–20

Variable (average rate, percent)
2015:Q2

5.52

5.57

5.51

5.27

Q3

5.65

5.70

5.63

5.36

Q4

5.70

5.73

5.69

5.31

2016:Q1

5.72

5.74

5.78

5.38

Q2

5.73

5.80

5.68

5.32

DALLASFED

–30
–40
–50

2011

2012

2013

2014

2015

2016

*Seasonally adjusted.
†Added to survey in second quarter 2011.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

Agricultural Survey
is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally
adjusted as necessary. Data were collected June 7–15, and 129 bankers responded to the survey.
This publication is prepared by the Federal Reserve Bank of Dallas and is available without charge by
sending an email to pubsorder@dal.frb.org or by calling 214-922-5270. It is available on the web at
www.dallasfed.org/research/agsurvey.
For questions, contact Amy Jordan, 214–922–5178.
Agricultural Survey • Second Quarter 2016 • Federal Reserve Bank of Dallas