Full text of Agricultural Survey : Second Quarter 2020

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Agricultural
Survey
Second Quarter 2020

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

Survey Highlights

B

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

ankers responding to the second-quar-

2020: Q1

ter survey reported overall weaker conditions across most regions of the Elev-

Demand for loans*

-14.4

enth District. They noted that dry conditions

Availability of funds*

are putting a strain on agricultural production

Rate of loan repayment

despite some rainfall in late May. In addition,

Loan renewals or extensions

survey participants noted that commodity prices remain low, including beef prices. “Although
beef prices are sky high at the supermarket,
little of that increase has found its way to the
producer, who still struggles with increased

10

rate of loan repayment continued to decline.

-30

Irrigated and ranchland values increased this
quarter, while dryland values were flat (Figure 2).
According to bankers who responded in both
this quarter and second quarter 2019, nominal

New Mexico (Table 1).
The anticipated trend in farmland values
index fell in second quarter 2020, suggesting respondents expect farmland values to decrease.
The credit standards index went up, indicating
further tightening of standards on net (Figure 4).

65.2

27.4

13.8

12.9

18.5

75.9

5.6

-15.3

-28.2

1.9

68.0

30.1

10.3

28.2

31.1

66.0

2.9

Loan renewals
or extensions

Rate of loan repayment

Demand for loans*

-40
-50

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

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

dry and irrigated cropland and ranchland values
increased year over year in Texas and southern

7.4

-10
-20

compared with a year ago (Figure 1).

-20.0

0

renewals or extensions increased while the
Loan volume fell across all major categories

qLess

30

survey participant said.

ing its 19th quarter in negative territory. Loan

Same

Availability of funds*

40

20

decline, with the loan demand index register-

pGreater

Index
50

input costs and uncertainty in the weather,” a
Demand for agricultural loans continued to

Percent reporting, Q2

2020: Q2

2020: Q1

Percent reporting, Q2

2020: Q2

pGreater

Same

qLess

Non-real-estate farm loans

-15.3

-24.5

4.9

65.7

29.7

Feeder cattle loans*

-15.6

-22.3

7.7

62.3

30.0

Dairy loans*

-21.6

-11.9

5.2

77.7

17.1

Crop storage loans*

-10.3

-14.7

7.3

70.7

22.0

0.0

-7.1

8.1

76.8

15.2

Farm machinery loans*

-19.6

-26.9

1.1

70.9

28.0

Farm real estate loans*

-10.1

-24.1

3.0

69.9

27.1

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
Northern High Plains
} Low prices and extremely dry conditions
are creating a strain on our producers.
Producers have to reevaluate their crops

District bankers were asked for additional comments concerning agricultural land
values and credit conditions. These comments have been edited for publication.

} The ag community is in trouble. In West
Texas, we have varied areas of moisture
from good to bad. Irrigated land is de-

pasture conditions range from poor to
fair. Cattle prices need to rebound to
make that enterprise profitable again.

} A freeze and a couple of very hot days

and marketing strategies to find better
ways to cash flow their operations.

cent, but no rain is in the forecast. And
of course prices are horrible. We must
have the government’s help to make it
through 2020.

} Dry conditions combined with low

} All agriculture prices are impacted by

50–75 percent damage. Cattle prices
have rebounded some at local sales. This
is another year where the producers will
have a hard time making a profit.

commodity prices have producers very
concerned about challenges in the second half of 2020.

} We are extremely dry. Grassland is
burning up, and the emerging corn
and cotton crops are suffering wind
damage. Packinghouse slowdowns
have caused a backlog in beef processing. Commodity prices remain low. I’m
not feeling very optimistic about the
2020 agriculture industry.

} It has been a challenging year for
bankers and customers alike. I feel our
communities need to open business as
soon as possible to relieve some of the
mental and financial stress caused by
COVID-19. A very large concern also is
the extended drought. The Mesonet
weather station in the north Panhandle
is showing 157 consecutive days without
receiving more than .25 inches of rain. In
the past six months, we have received
2.5 inches. A drought of this magnitude
and low commodity prices may make for
a challenging fall renewal season.

} Dry conditions in the north Panhandle
region present an ongoing challenge
to producers, as well as depressed commodity prices and economic uncertainty.

Southern High Plains
} Drought is hurting our area. Cotton is
being dry planted, and the grass color
is turning now. Cattle are in fair-to-good
shape. Peanuts are planted and looking
OK currently. Overall, current economic
conditions are impacting farmers who
most likely will need government assistance to break even and stay in business.

COVID-19.

} It’s very dry in most of our territory.
We are in need of rain soon to have a
dryland cotton crop. Coronavirus Food
Assistance Program (CFAP) funds are
minimal but helpful especially for cattle
producers. Markets continue below
breakeven on all commodities.

} The Coronavirus Aid, Relief and Economic Security (CARES) Act worked out
OK for those who actually marketed fat
cattle; for all others, it has been immaterial. We had a substantial amount of our
ag producers receive Payroll Protection
Program loans. Virtually all our agribusiness customers did as well, and this has
provided meaningful support. Utilization
of the Small Business Administration’s
Economic Injury Disaster Loan (EIDL)
program has not been widespread. We
only have a couple of agribusinesses at
most who may have utilized the Main
Street Lending Program. Crop prospects
on the South Plains are terrible. Rainfall
has been very much lacking, especially
in the western half of the area. Abandonment will be sizeable; with crop prices so
poor, insurance adjustments will probably work out better than taking the crop
to harvest.

Northern Low Plains
} Low commodity prices have impacted
projected cash flow and last year’s payout of operating loans. The depressed
commodity prices, drought conditions in
some of our area and now the banning
of the herbicide Dicamba has added to
an unsettled undertone in our area. Our

Agricultural Survey | Second Quarter 2020 | Federal Reserve Bank of Dallas

have hurt what looked to be a bumper
wheat crop. Some fields were completely destroyed, while many others suffered

North Central Texas
} Cattle prices are depressed due to
supply chain issues. Agriculture land
prices appear to be stable, but there
is not much available for sale or many
recent transactions.

Central Texas
} Due to the shutdown of the economy, the
real estate market has come to a virtual
halt. Many transactions were scrubbed.
Borrowers/buyers have taken to the sideline in a wait-and-see mode. Volatile beef
prices have created more concern about
ranch management planning. The good
news is, we had some nice rains in May.

Trans-Pecos and
Edwards Plateau
} Cattle prices have somewhat fallen due
to shutdowns in the packing industry.
Although beef prices are sky high at the
supermarket, little of that increase has
found its way to the producer who still
struggles with increased input costs,
uncertainty in the weather and predator
problems. Some rain has fallen in the
Edwards Plateau over the last quarter,
but it has been spotty.

} Market prices for sheep and goats
remain at good levels, though they
fluctuate week to week. Movement
continues away from wool sheep toward hair sheep due to decreased labor

Table 1—Rural Real Estate Values
Second Quarter 2020
Banks1
LOUISIANA

NEW MEXICO

Average
value2

2Q 2020

Percent change3
in value from
previous year

Cropland—Dryland
District*

82

2,002

2.9

Texas*

73

2,019

3.2

1

Northern High Plains

10

944

4.1

2

Southern High Plains

12

921

1.1

3

Northern Low Plains*

6

862

-6.9

4

Southern Low Plains*

n.a.

n.a.

n.a.

5

Cross Timbers

4

1,763

9.3

6

North Central Texas

11

3,136

7

East Texas*

5

2,959

5.2

8

Central Texas

9

4,244

10.7

9

Coastal Texas

3

1,900

-5.1

10

South Texas

5

2,270

-.05

11

Trans-Pecos and Edwards Plateau

6

3,083

4.1

12

Southern New Mexico

3

600

10.2

13

Northern Louisiana

6

2,825

-5.0

District*

65

2,834

1.9

Texas*

54

2,444

2.8

TEXAS

Regions of the
Eleventh Federal
Reserve District

requirements and productivity of the hair sheep.
Market prices for cattle in general continue lower,
though replacement-cow market prices remain

.09

Cropland—Irrigated

decent. Pasture conditions remain on the dry side,
though scattered areas have had very beneficial
rainfall and increased grass production. General
rainfall is needed ahead of the coming summer

1

Northern High Plains

10

2,351

1.2

2

Southern High Plains

12

1,769

7.7

months. Profitable operation of ranching operations remains challenging.

3

Northern Low Plains*

5

2,178

3.3

4

Southern Low Plains

n.a.

n.a.

n.a.

5

Cross Timbers

n.a.

n.a.

n.a.

6

North Central Texas

4

3,375

0.0

7

East Texas

3

3,200

0.0

8

Central Texas

5

4,080

9.4

9

Coastal Texas

3

2,367

-11.5

10

South Texas

4

3,275

0.0

11

Trans-Pecos and Edwards Plateau

5

4,310

2.8

12

Southern New Mexico

5

5,000

1.8

13

Northern Louisiana

6

4,483

-3.1

District*

85

2,243

4.0

Texas*

76

2,675

4.0

1

Northern High Plains

10

705

2.2

2

Southern High Plains

8

763

4.9

3

Northern Low Plains

4

Southern Low Plains*

5

Cross Timbers

6

North Central Texas

7

East Texas

8
9

Southern New Mexico
} Precipitation is greatly needed in this area both
for ranchers as well as for summer crops to have
a chance. High temperatures and hot winds are
quickly eradicating any moisture we had built
up. Commodity prices are seen as being unstable
right now.

Ranchland

5

940

1.4

n.a.

n.a.

n.a.

5

1,920

5.5

11

3,359

1.7

10

3,070

8.5

Central Texas

9

7,111

7.2

Coastal Texas

3

3,000

0.0

10

South Texas

4

2,713

5.2

11

Trans-Pecos and Edwards Plateau

9

2,850

2.3

12

Southern New Mexico

4

363

7.1

13

Northern Louisiana

5

2,750

0.0

*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 2020 | Federal Reserve Bank of Dallas

Figure 2—Real Land Values

Figure 3—Real Cash Rents

2019 dollars per acre
3,000

2019 dollars per acre per year
60

Irrigated

2019 dollars per acre per year
140

2,800

Irrigated

50

2,600
2,400

100

40

Ranchland

2,200

120

80

Dryland

30

2,000

60

1,800

Dryland

1,600

20

1,400

40

Ranchland

10

20

1,200
1,000

0

0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
NOTE: All values have been seasonally adjusted. Real values are created by deflating
the nominal values using the implicit price deflator for U.S. gross domestic product.

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

NOTE: All values have been seasonally adjusted. Real values are created by deflating
the nominal values using the implicit price deflator for U.S. gross domestic product.

Long-term farm
real estate

Intermediate
term

Other farm
operating

Feeder cattle

Table 2—Interest Rates by
Loan Type

Fixed (average rate, percent)

Figure 4—Anticipated Farmland Values and Credit Standards
What trend in farmland values do you expect in your area in the next three months?
Index

Anticipated trend in
farmland values*

7.02

7.11

6.83

6.40

Q3

6.90

6.89

6.71

6.42

Q4

6.58

6.61

6.45

6.11

2020: Q1

6.46

6.53

6.28

5.96

Q2

5.81

5.91

5.80

5.58

Variable (average rate, percent)

2020: Q1

2020: Q2

pUp

Stable

qDown

0.1

-9.3

2.3

86.1

11.6

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

2019: Q2

Percent reporting, Q2

2020: Q1

2020: Q2

pTightened

Same

qLoosened

13.1

20.2

21.2

77.9

1.0

Index
50
40

Credit standards †

30
20
10
0

2019: Q2

6.84

6.85

6.80

6.42

Q3

6.58

6.59

6.50

6.21

Q4

6.39

6.29

6.23

5.88

2020: Q1

6.15

6.19

6.10

5.72

Q2

5.38

5.49

5.45

5.16

-10
-20
Anticipated trend
in farmland values*

-30
-40
-50
2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

*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
Agricultural Survey is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally adjusted as necessary. Data
were collected June 2–10, and 106 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/surveys/agsurvey.aspx, where you may sign up for free email alerts to be automatically notified as soon as the latest survey is
released on the web. For questions, contact Jesus Cañas, 214–922–5221.