Full text of Agricultural Survey : Third Quarter 1990

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STATISTICAL

F E D E R A L

RELEASE

R E S E R V E

B A N

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

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

•

Bankers Report
Weak Land Values

Agricultural Credit
Conditions at Survey Banks
in the Eleventh District

The October 1 survey of agricultural credit
conditions indicates continued lack of strength in
Eleventh District land values. Land values fell in
several regions, with the largest drop in Coastal
Texas, where dry soil has hampered agricultural
production. One exception is South Texas, where
land values continue a steady increase.
Banks in the High Plains and New Mexico report
an increase in the demand for loans. Banks in North
Central Texas noted a reduction in the rate of loan
repayment and an increase in loan renewals or
extensions. Many banks (44 percent) reported an
increase in the amount of collateral required. Fortysix percent of the bankers surveyed would like to
keep the same volume of loans available to farmers
and ranchers, while 45 percent want to increase
agricultural loans.

Demand for Loans

•

Percent

0
1986

1988

1987

Less

•same

1989

1990

• Greater

the Research Department,

Availabil ity of Funds

Federal Reserve Bank of
Dallas, Station K, Dallas,

Percent
100 -

District Land Values
1

1982 Dollars Per Acre

Texas 75222, or by

1100

telephoning (214) 220-5127.

1000

900

800

For questions regarding
40

700

information in the release,
contact Fiona Sigalla,

600
20

500

(214) 220-5129.
400
300

0
1986

1987

1988

200 -+-~-.-~-.-~-.-~-.-~-.-~-.-~---..~--.~
1982

1983

1984

1985

1986

1987

1988

1989

1990

Less

1989

~
990

•same
• Greater
------

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks
in the Eleventh District
Rate of Loan Repayment
Percent
100 -

Loan-Deposit Ratios at Survey Banks
Average Actual and Desired Ratios

Percent

60
55
50
45
Actual Ratio
1986

1988

1987

1989

1990

Desired Ratio •

35
• Less

• Same

• Greater

1989:3

1989:4

1990:1

1990:2

1990:3

Renewals or Extensions of Loans
Percent

BanJcs Reporting (Percent)

Ratio

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

1989
Oct. 1

31
22
20
17
9

1990
--Apr. 1
Jul. 1
Oct. 1

--Jan. 1

36
21
25
12
6

40
24
20
11
4

37
24
24
11
4

0
1986

1987

1988

Less

•same

1989

1990

• Greater

Average Rate (Percent)

Amount of Collateral

Loan type

Percent
100 -

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

1989
Oct. 1

12.97
13.03
13.10
12.68

Jan. 1

1990
--Apr. 1
J ul. 1 Oct. 1

12.85
12.93
12.93
12.67

12.71
12.82
12.86
12.58

----

12.72
12.79
12.83
12.44

12.57
12.67
12.71
12.47

INTEREST RATES-VARIABLE
Average Rate (Percent)

Loan type

0
1986

1987

• Less

1988

•same

1989

• Greater

1990

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

1989
Oct. 1

Jan. 1

1990
Apr. 1
Jul. 1

Oct. 1

12.80
12.92
12.90
12.65

12.76
12.84
12.90
12.63

12.52
12.60
12.60
12.38

12.53
12.57
12.61
12.37

12.51
12.60
12.59
12.28

STATISTICAL

Rural Real Estate Values

RELEASE

CROPLAND-DRYLAND

October 1, 1990
Region

Number of banks reporting.
Dollars per acre.
n.r.-No response or not enough responses.

NOTE: Regional land values based on a small
number of reporting banks should be used
with caution.
All figures are preliminary.

Average
Value 2

Banks'
Third Qu~-.:1990

Percent Changes
in Values from
PreVJOus Previous
Quarter
Year

DISTRICT

209

550

-1.2

-1.1

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

191
29
20
14
17
18
30
14
21
7
12

549
239
356
325
464
422
706
653
891
744
715

-1.6
-2.8
0.8
0.9
1.0
-3.9
-2.8
-0.7
-3.4
-5.0
5.9

-1.5
-7.4
5.3
2.7
13.2
-9.7
3.1
-5.6
-7.3
-8.4
11.2

559

-0.5

-7.5

Northern Louisiana
Southern New Mexico

14
4

611
225

2.9
0.4

4.2
4.8

Eleventh Federal Reserve District
CROPLAND-IRRIGATED

Region

12
NEW

1
2
3

4
5
6
7

MEXICO

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

8
9
10
11
12
13

Central Texas
Coastal Texas
South Texas
Trans-Pecos and Edwards Plateau
Southern New Mexico
Northern Louisiana

Average
Banks'
Value2
Third Quarter 1990

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

127

654

0.4

-4.0

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

112
26
19
8
9
7
6
3
11
5
11

638
482
581
486
630
699
990
634
1,245
661
1,056

0.6
0.1
3.1
0.7
-2.9
-1.7
-7.0
-8.8
3.1
-10.3
5.5

-2.1
3.2
8.4
8.1
-0.8
-10.9
-27.3
-0.4
-19.5
-0.8

878

-0.3

-6.4

Northern Louisiana
Southern New Mexico

12
3

821
745

1.4
-1.7

-1.3
-17.9

1.1

RANCHLAND
Region

AveI"age
Banks'
Value2
Third Quarter 1990

Percent Changes
in Values from
Previous Previous
Quarter
Year

DISTRICT

214

298

-1.2

-6.8

201
26
12
14
17
19
29
23
23
6
13

372
145
129
186
227
355
622
641
787
474
526

-1.8
0.6
-4.4
0.3
-4.7
-2.5
-2.1
-4.4
-10.4
2.3

-8.4
-4.1
-8.0
2.2
2.3
-8.4
1.5
-5.9
-12.4
-25.1
11.5

290

-1.4

-18.9

9
4

369
84

-1.2
7.9

5.6
19.0

Northern Louisiana
Southern New Mexico

1.1

STATISTICAL

RELEASE

Third-Quarter
Comments
District bankers were asked for any
additional comments concerning agricultural
land values or credit conditions. Because of
space constraints, these comments were
edited. The views expressed do not necessarily
represent those of the Federal Reserve Bank
of Dallas.

Region I-Northern High Plains
Overall, the outlook is good, but most
farmers will require additional funding to
finish crops because of increased irrigation
expenses earlier in the year.
If Gramm-Rudman reduces government
deficiency checks, we will have a loss year.
Feed yards continue to stay full. The outlook is
good for feed cattle through early 1991.
At best, we may only break even despite
bumper crops. Next year will also be difficult
with considerably higher fuel costs and
expected cuts in government programs. This
prospect, along with low prices, should make it
very difficult to show any positive cash flow on
corn and wheat. Beets (sugar) and cotton may
be our only crops that show positive cash flow
for 1991.

Region 3-Northem Low Plains
We are being forced to look al additional
fees and/ or jnterest rate increases because of
Federal Deposit Insurance Corp. assessment
increases. Community banks can no longer
absorb federally mandated cost increases
without corresponding increases for services.

Region 4-Southem Low Plains

1990 has been an extremely expensive
crop year. Loan volume has increased
tremendously because producers have stored
grain, and wheat prices did not increase.
Prices are still ve1y static with all the world
turmoil, but our outlook seems to be better
than in previous years.
Region 5-Cross Timbers
Land values are stable. Credit conditions
are tight. Farming economy is becoming
depressed because commodity grain prices are
dropping. Farm program payments are

essential for survival. Grass pasture and crop
conditions are good.
Some operators who are running
yearlings on grain over winter are converting
to custom, per-pound gain, grazing of investor
cattle. At a 35 cents-per-pound gain, this has
made some money where borrowing and
buying cattle for the grain has bankrupted
several experienced operators. Those
converting have had enough!

ranch land is leased to oil producers, and
tenants have begun to drill a few wells.
High levels of aflatoxin are being detected
in white corn for human consumption. White
corn has been the mainstay for many farmers
in the Winter Garden area, and the recent
developments with their product's contamination could cause producers to shift to cotton
production:

Region 9-Coastal Texas
Region 6-North Central Texas
Poor crop yields on small grains and corn
have forced most local farmers to have a
higher debt carryover. Many local financial
institutions are looking more favorably at
Farmer's Home Administration (FmHA)
guaranteed loans. In our case, FmHA loans
may be the only way to fully finance some of
our larger lines for the 1990-91 crop year.
Stringent requirements for disaster assistance
are also a problem for many local farmers.
Higher fuel and chemical prices have
dealt farmers another crippling blow. They are
already reeling from this year's poor crop and
soft commodity prices. This year, Central
Texas farmers have lost millions of dollars
worth of potential income because of flooding
and drought. We are really concerned that a
lot of farmers will be forced out of business if
next year is as bad as this one.

Region 7-EastTexas
Agriculture is somewhat stronger thanks
to better summer moisture and favorable cattle
prices. Locally produced hay is in good supply.
All real estate is selling very slowly, especially
raw agricultural land. Estimating values is
difficult, given the lack of current sales.

Region 8-Central Texas
BotTOwers are having a hard time
complying with all the paperwork required by
bank examiners, such as financial statements,
cash-flow statements, budgets, projections and
income tax statements. Small borrowers
cannot afford high-priced CPAs and auditors.
Parts of our area continue to suffer from
severe drought conditions. Stock tanks and
creeks are dangerously low; however, pastures
remain green. Many farmers have planted
small grains for winter forage to alleviate hay
shortages, but crops will need moisture soon.
The corn crop was below average. Hog .
producers need to buy corn, cutting deeply
into profits.
Oil activity is increasing. Most farm and
_i__________ _ _

Harvest ended as anticipated-terribly.
Grain production averaged 50 percent of 1988
yields per acre. Cotton averaged 50 percent to
75 percent of 1988 yields, with grain and cotton
about the same or slightly worse than last
year. There have been many farm equipment
auctions in our area because some farmers are
getting out of the business. We must have
deep, soaking rains this fall and winter.

Region 10-South Texas
Cattle prices are good, and farmers are
getting bonuses on peanuts. Late sununer and
early fall rains have made the local agricultural
outlook optimistic.

Region 12-New Mexico
Cattle prices remain high. Winter wheat
prospects look good. Wheat pasture quotes are
running 25 cents to 50 cents higher per cut of
beef.

Region 13-Louisiana
The crisis in the Middle East will have a
major impact on 1991 production costs, such
as fuel, fertilizer and chemicals. Cash flows will
be much more difficult to work with and will
probably reduce the number of farmers
qualifying to purchase equipment and real
estate.

For Free Economic Data & Information, dial

-===FED FLASH==our new, easy-to-use
computerized bulletin board
Dial

(214) 220-5169
to link your modem-equipped
personal computer, or call (214) 220-5128
for more information.

Full text of Agricultural Survey : Third Quarter 1990

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