View original document

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

STATISTICAL

F E D E R A L

R E S E R V E

RELEASE

B A N K

0

F

D

A

L

L

A

S

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

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

Demand for Loans
Seventeen percent of respondents report a
decrease in demand for loans.
Percent
100

80

Third Quarter 1995

60

40

20

Quarterly Survey of

A leveling off of District land values is evident in third-quarter survey results. The survey
also shows smaller changes in cash rents in the
third qua1ter. Furthermore, fewer third-quarter
than second-qua1ter survey respondents expect
farmland values to increase; the number of
respondents expecting farmland values to
decrease rose in the third quarter. Here are
further survey details:

0
1989

1990

1991

Less

1992

• Same

1993

1994

1995

• Greater

Funds Available for Additional Lending
Respondents reporting a decrease in the availability
of funds increase slightly to 10 percent.
Percent
100

Agricultural Credit
80

Conditions is compiled from
a survey of Eleventh District
agricultural banke rs. This
publication is pre pared by
the Federal Rese rve Bank
of Dallas and is available
without charge by writing
to the Research Department,
Fede ral Reserve Bank of
Dallas, P.O. Box 655906,
Dallas, TX 75265-5906,
or by tele phoning
(214) 922-5254.

For questions regarding
information in the release ,

• Twenty-eight percent of banks report a
loan repayment rate lower in third-quarter
1995 than in third-quarter 1994; this percentage is an increase from 21 percent in
second-quarter 1995.

Tho mas , (21 4) 922-5178.

40

20

• Fewer banks want to increase the volume
of loans available to farmers and ranchers ,
based on a comparison of second- and
third-quarter responses; 42 percent of the
banks surveyed prefer to keep the current
loan volume.
• The average loan-to-deposit ratio has increased during the past three qua1ters to its
current level of 51, 8 percent higher than
1994's third-quarter level of 47. Respondents also report an increase in the desired
loan-to-deposit ratio.
• Banks' average cost of funds leveled off in
the third quarter to about 4 percent.

contact She ila Sommer,
(21 4) 922-5191 , or Michelle

60

• The typical interest rates charged on most
types of loans have fallen by about 25
basis points for both variable rate and
fixed-rate loans.

0
1989

1990

1991

Less

1992

• Same

1993

1994

1995

• Greater

Rate of Loan Repayment
The rate of loan repayment has decreased,
according to 28 percent of the respondents.
Percent
100

80

60

40

20

0
1989

1990

1991

Less

1992

• Same

1993

• Greater

1994

1995

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Twenty-four percent of respondents report
an increase in renewals and extensions.
Percent
100

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

80

Percent
~~~~~~~~~~~~~~~-so

60

55

II II II II

40

50

Ill II II 1111

20

0
1989

1990

1991

1992

Less

• same

1993

1994

1995

•Greater

II
II

I --W
I I

Actual Ratio
Desired Ratio

1994:3

1994:4

I
I

1995:1

45

I
I

1995:2

40

35
1995:3

Amount of Collateral
Collateral requirements have increased for
20 percent of the respondents.
Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS
80

Banks Reporting (Percent)
60

Ratio

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

40

20

0
1989

1990

1991

Less

1992

• same

1993

1994

1995

1994
Oct. 1

Jan. 1

41
18
16
14
12

47
20
15
10
9

1995
Apr. 1
Jul. 1

44
19
16
15
7

42
17
17
14
11

Oct. 1

31
22
18
14
14

INTEREST RATES-FIXED

•Greater

Average Rate (Percent)

Total Agricultural Loans at
Eleventh District Agricultural Banks
Total agricultural loans increase almost
4 percent in second-quarter 1995.

Ratio

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

Millions of dollars (seasonally adjusted)

1994
Oct. 1

Jan. 1

1995
Apr. 1
Jul. 1

Oct. 1

10.05
10.11
10.07
10.14

10.51
10.53
10.56
10.63

11.03
11.06
11.15
11.04

10.77
10.86
10.71
10.47

11.01
11.04
11.07
10.74

4,400

INTEREST RATES-VARIABLE

4 ,200

Average Rate (Percent)
4,000

Ratio

1994
Oct. 1

Jan. 1

1995
Apr. 1
Jul. 1

Oct. 1

10.23
10.32
10.13
10.11

10.91
10.97
10.77
10.79

11.37
11.43
11.28
11.04

10.74
10.88
10.82
10.49

3,800

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

3,600

3,400

'86

"87

'88

'89

'90

·91

'92

'93

'94

'95

11.05
11.12
11.07
10.74

STATISTICAL

RELEASE

CROPLAND-DRYLAND

Rural Real Estate Values
October 1, 1995

Region

1

Number of banks reporting land values.
2
Nominal dollars per acre.
n.r. -Not reported .
NOTE: Regional land values based on a small
number of reporting banks should be used
with caution.
All figures are preliminary.

Eleventh Federal Reserve District

Average
Value 2
Banks'
Third-Quarter 1995

P ercent Changes
in Values from
Previou s Previous
Quarter
Year

DISTRICT

159

564

- .3

.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

148
19
18
11
15
14
22
5
16
8
8

561
299
349
306
392
464
730
725
918
836
549

n.r.
- 1.5
-.4
.3
-1.8
- 1.9
.2
-2.7
4.1
3.0
- 2.5

2.2
5.3
n.r .
4.8
-.6
4.3
7.4
10.6
-1.7
- 1.9
-11.3

12

526

-2.1

-1.9

8
3

637
247

- 3.3
-2.8

- 13.1
8.2

Northern Louisiana
Southern New Mexico

CROPLAND-IRRIGATED
12
NEW

MEXICO

Region

DISTRICT

1
2
3
4
5
6
7

Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Tim be rs
North Central Texas
East Texas

10
11
12
13

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

1,200

1,000

800

_..... ,

400

"'

''
"'Ranch land

200

Dryland

-- ______ .,,,,._,.-

0-'-~~~~~~~~~~~~~~~~~~

'82

'83

'84

'85

'86

'87 '88

'89 '90

'91

'92

'93

102

760

.7

8.3

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

89
18
18
6
9
7
4
n.r.
8
n.r.
7

677
580
617
450
612
674
876
n.r.
1149
n.r.
992

2.1
.9
.3
4.7
- 2.8
.5
7.9
n.r.
.3
n.r.
3.9

7.1
12.3
5.1
11.3
1.6
5.0
8.4
n.r.
-8.7
n.r.
1.2

11

782

1.0

2.3

Northern Louisiana
Southern New Mexico

8
5

859
1466

-2.3
- 6.0

- 9.3
13.2

Region

Dollars

/

P ercent Changes
in Values from
Previous P revious
Quarter
Year

RANCH LAND

Eleventh District Land Values
District land values level off, leaving ranch/and
values 21 percent higher than 1994's thirdquarter level.

600

Average
Banks'
Value 2
Third-Quarter 1995

'94 '95

Average
Banks'
Value 2
Third-Quarter 1995

P ercent Changes
in Values from
Previou s P reviou s
Quarter
Year

DISTRICT

157

356

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

148
17
14
10
15
14
19
11
16
5
8

394
191
171
160
223
428
631
705
776
588
419

-.6
1.6
11.7
- .9
- 3.3
3.0
.3
n.r.
-1.0
5.3
-1.9

8.0
12.7
26.5
5.2
.3
18.5
5.7
2.0
-11.7
23.3
.8

19

347

-2.7

18.5

Northern Louisiana
Southern New Mexico

5
n.r.

427
n.r.

-3.8
n.r.

-8.3
n.r.

.3

20.9

STATISTICAL

Third-Quarter
Comments
Region 1-Northem High Plains
Increased expenses, decreased yields,
depressed fat cattle prices and higher cost of
gain point to increased loan renewals.

-

Region 4-Southem Low Plains
Beet armyworm infestation has reduced
the cotton crop. However, prices appear to be
approximately 25 cents per pound higher than
projected. Corn, sorghum and wheat yields
have been better than projected, and the
prices have been higher.

Region 5-Cross Trmbers
Grazing conditions are excellent going into
winter. With all the rain in the past 30 days, we
need a late frost for cotton to reach its potential. Farmers are just now able to sow wheat,
so it will be several weeks before grazing
conditions on wheat pastures are ready.
The peanut harvest has begun. Fields are
very wet. High feed prices are reducing profits
in beef cattle and dairy operations. Ag producers are very concerned about the impact of
the new farm bill.
The major row crop in this area is
peanuts. With the current debate in Congress
over the future farm bill, the peanut program
could be a casualty. Farmers are taking a waitand-see approach, which has drastically
slowed down any capital expenditures.
Cotton looks good, there is good moist ure for wheat planting, and cattle prices are
down.

-

Region 6-North Central Texas
Grain crop harvests have been good with
good prices. The cotton crop is about 400
pounds of lint per acre with good prices.

Region 7-EastTexas
Lower calf prices are causing problems
for some cow and calf operators struggling to
meet required principal reductions. Dairy
producers are having cash flow problems as
milk prices are 3 to 5 percent below last year's
prices. Hay is short, and feed prices are going
up; this could make for a long winter.

RELEASE

Anxiety over government farm policy
changes is significant among dairy producers.
Operating margins continue to suffer seasonally, and feed costs are increasing steadily.
Weather is favorable for dairy and feeder
producers' winter pasture plantings.
Poultry death loss in August's heat was
high, but producers report little negative
impact overall.

,_

projected through these programs; however,
marketing is the key.
Moisture conditions are excellent
throughout the Golden Crescent area . _

,_

Region 10-South Texas
-

Hunting and recreational ranches
continue to gain value, especially those within
one hour's driving time of San Antonio.
-

Region 8-Central Texas

-

Low cattle prices have caused some
producers to hold their calves and wait for
markets to improve. Others are sending cattle
to feed lots. Some ranchers are having a hard
time reducing their operating loans to the
levels of past years.
Purchase money loans for cattle are very
slow compared with the level a year ago. The
primary reasons are the downturn in cattle
prices and an uncertain future.
The uncertainty of the '95 farm bill is
causing problems. Leases for riceland are
pending, and with no financing in place,
farmers cannot commit.
Banks' ability to finance one-fourth of
rice farmers is in question under the '95 farm
bill. Young and low-equity farmers will be
hard hit.
Low cattle prices are hurting ranchers.
Producers are holding calves in pastures
longer to increase their sale weights. Some
ranchers will hold calves and graze them this
winter on oats and wheat. Most ranchers are
gearing up to sell 600-pound-plus calves over
the next few years.
Local ranchers blame imports ofover900,000
Mexican cattle for the rapid drop in cattle prices.
Light crossbred calves (250 to 350 pounds) are
selling for only 50 to 60 cents per pound.

Region 9 - Coastal Texas
The Texas Gulf Coast (Golden Crescent
area), which includes Victoria and the surrounding counties, has had an exceptionally
good farming year. Above-average prices for
farm commodities and exceptionally good
yields have helped farmers substantially
improve their financial condition.
Cow and calf producers in the area will
remain marginally profitable as calf prices
trend downward as a result of oversupply and
seasonal price pressures. Adding value to
calves is the marketing challenge for the cowcalf sector. Consideration should be given to
retaining ownership in calf crops through
winter grass programs or other grazing/
feeding scenarios. Profitability can be

Region 11-Trans-Pecos and
Edwards Plateau
Crop production will be down this year
due to infestation of insects, especially the
beet armyworm. With this problem, compounded by low cattle prices, we anticipate
more consolidations of smaller operations and
increased land sales to nonproducers for
recreation uses.
Future credit conditions for more highly
leveraged ranchers will depend on mohair
and wool prices and the value of cull goats
and sheep. Recent mohair market deterioration, coupled with loss of incentives for the
1996 crop year, will be a blow to our area
unless prices turn around. Many producers
have calculated their break-even price at $3
per pound of mohair; recent prices have been
$1.50 per pound. Incentives will help this
year, but they don't appear to be here for
future years. The weak cattle market also
limits alternatives (and profitability) for
producers.
Current cattle prices continue to concern
us. Most producers will be able to pay back
their operating loans but will have little or
nothing left to pay other debt. Pasture
conditions are good to excellent.

,_

Region 12-Southem New Mexico

As we go into the last quarter of 1995,
we believe the farmers in our area will have a
difficult time repaying their operating loans.
Growing conditions for chile crops have been
very poor, and we anticipate some problem
loans from 1995. Problems in the cattle market
are serious, and we foresee some troubled
loans in that area as well.

Region 13-Northem Louisiana
Actual values aren't available because the
number of land sales is low and the land
quality varies greatly. After a hot, dry summer,
agricultural conditions are poor. Irrigation has
had little effect on cotton yields.