Full text of Agricultural Survey : Third Quarter 1997

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STATISTICAL
F

R E S E R V E

RELEASE

B A N K

Agricultural Credit Conditions at
Survey Banks in the Eleventh District

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

Demand for Loans
Fifty-six percent of responding banks
report no change in the demand for loans.
Percent
100

Third Quarter 1997

Quarter~y

Suroey of

Agricultural Credit
Conditions is compiled from
a su1vey of Eleventh District
agricultural bankers. This

The Third Quarter Survey of Agricultural
Credit Conditions suggests that a good harvest
across most of the Eleventh District will lead to
continuing improvement in the financial situation of most producers. Bankers' comments
(see page 4) suggest good peanut and cotton
crops but persisting difficulties for the dairy
industry. Eighty-one percent of responding
bankers expect farmland values to remain stable
over the next three months, and 17 percent
expect an upward trend in farmland values. In
some regions, bankers note that the price of
farmland is being bid up by demand for recreational uses and from the oil and gas industry.
Here are additional details from the survey:

0
01 :'91

01 :'92

01 :'93
Less

01:'94
Same

01:'95

01 :'96

01 :'97

• Greater

Funds Available for Additional Lending
Eighty percent of respondents report
no change in the availability of fun ds for lending.
Percent
100

publication is prepared by
the Federal Reserve Bank
of Dallas and is available
without charge by writing
to d1e Research Department,

Federal Reserve Bank of
Dallas, P.O. Box 655906,
Dallas, TX 75265-5906,
o r by telephoning
(2 14) 922-5254.

For questions regarding

• While agricultural land values remained
relatively stable overall, there was some
variation across regions. In the Southern
New Mexico region, bankers reported
that irrigated land values fell 13 percent
and ranchland values dropped 24 percent over second-quarter values. Land
values were also lower in the Central
Texas region, where irrigated and dryland values were down 8 percent and
ranchland values were down 5 percent.
In the South Texas region, however,
dryland and ranchland values were up
7 percent, while irrigated land values
increased 8 percent.

0
ru~

ru~

Less

ru~

Same

ru~

• Greater

Rate of Loan Repayment
The rate of loan repayment remains unchanged
for 67 percent of third-quarter respondents.
Percent
100

(Continued on page 4)
information in the release,

contact Sheila Delmas,
(2 14) 922-5191.

0
01 :'91

01 :'92

01 :'93
Less

01 :'94
• Same

01: '95

01 :'96

• Greater

0 1:'97

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Seventy-one percent of respondents report
the same number of renewals or extensions.
Percent
100

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

Percent
~~~~~~~~~~~~~~~~

60
40

55
50

45
Actual Ratio

0
0 1:'91

01 :'92

01:'93

Less

01 :'94

01 :'95

• Same

01 :'96

01 :'97

• Greater

Ill

40
35

Desired Ratio

1996:3

1996:4

1997:1

1997:2

1997:3

Amount of Collateral
Eighty-eight percent of survey respondents
report no change in collateral requirements.
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%

0
01:'91

0 1:'92

01 :'93

01 :'94

Less

01 :'95

Same

01 :'96

01 :'97

1996
Oct. 1

Jan. 1

27
19
22
18
15

34
20
23
18
6

19 97
Apr. 1
J ul. 1

29
27
20
15
9

24
22
23
17
15

Oct. 1

21
18
20
25
15

INTEREST RATES-FIXED

• Greater

Average Rate (Percent)

Total Agricultural Loans at
Eleventh District Agricultural Banks
Agricultural lending, up 2 7 percent in the second
quarter, rebounds from drought-related pullback.

Ratio

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

Millions of dollars (seasonally adjusted)

1996
Oct. 1

Jan. 1

1997
Apr. 1
Jul. 1

Oct. 1

10.45
10.56
10.51
9.96

10.48
10.56
10.41
9.90

10.46
10.56
10.37
10.05

10.47
10.56
10.39
9.71

10.55
10.68
10.48
9.95

5,000

INTEREST RATES-VARIABLE

4 ,BOO

Average Rate (Percent)

4,600

1996
4,400

Ratio

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

4,200

4,000

'B6

'87

'BB

'89

'90

'91

'92

'93

'94

'95

'96

'97

Oct. 1

Jan. 1

1997
Apr. 1
J ul. 1

Oct. 1

10.37
10.53
10.31
10.04

10.32
10.53
10.33
10.02

10.42
10.53
10.40
10.09

10.69
10.71
10.38
9.88

10.69
10.66
10.50
10.06

STATISTICAL

RELEASE

CROPLANO-ORYLAND

Rural Real Estate Values
October 1, 1997

Region
1

Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
3 Not adjusted for inflation.
n.r.- Not reported due to insufficient responses.
2

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

Eleventh Federal Reserve District

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

126

566

1.9

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
T rans-Pecos and
Edwards Plateau

119
17
19
8
12
12
17
3
10
6
6

561
287
342
297
425
494
780
714
831
820
537

.5
.9
1.2
1.8
4.6
- 1.7
3.0
-1.3
-8.3
3.0
7.1

2. 1
2.3
7.3
- 1.0
10.8
3.0
-1.4
8.3
-12.0
4.0
20.8

555

3.7

15.3

4
3

676
226

.2
-.2

1.0
.3

Northern Louisiana
Southern New Mexico

CROPLAND-IRRIGATED

12
N EW

Average
Value2
Banks'
Third-Quarter 1997

MEXICO

Region

8 Central Texas
9 Coastal Texas
10 South Texas

1 Northern High Plains
2 Southern High Plains
3 Northern Low Plains
4 Southern Low Plains
5 Cross Timbers
6 North Central Texas
7 East Texas

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

Average
Value2
Banks'
Third-Quarter 1997

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

727

-1.4

3.0

72
15
18
5
9
6
n.r.
n.r.
6
n.r.
4

680
590
649
383
642
738
n.r.
n.r.
1,256
n.r.
836

.8
.2
-1.3
-2.8
3.7
6.9
n.r.
n.r.
-7.9
n.r.
8.4

4.4
3.7
2.6
-15.7
3.6
4.0
n.r.
n.r.
-2.9
n.r.
23.9

791

- 7.4

- 12.1

Northern Louisiana
Southern New Mexico

4
5

907
1,130

1.5
- 13.5

-1.8
- 3.7

RANCHLAND

Region

Real Eleventh District Land Values
Land values remain relatively stable.
1992 dollars per acre
1,600
1,400
1,200

1,000
800
600

- ,, -

.....

Dryland

400
200
0

Ranch land

- -- ------

Percent Changes3
in Values from
Previous Previous
Quarter
Year

DISTRICT

129

334

4.7

121
14
15
8
11
14
17
6
13
5
6

415
169
138
154
232
432
707
762
893
569
468

3.7
.9
-4.4
4.2
2.3
-1.1
2.3
2.6
-5.3
1.8
6.5

3.8
-.4
0
.1
-3.2
-5.6
-3.6
2.8
-4.9
3.8
25.3

360

9.7

5.8

3
5

444
98

- 1.1
-23.6

7. 1
16.0

Northern Louisiana
Southern New Mexico
'82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97

Average
Value2
Banks'
Third-Quarter 1997

STATISTICAL

Third-Quarter
Comments

Cattle prices have remained firm
longer into fall than expected. Feedlots
are full, and a price break is imminent.
Rainfall is favorable, supporting cattle
prices. Dairy margins are modest, with
producers questioning cooperatives'
milk prices. Apparently recent Basic
Formula Price increases are not being
passed along promptly by cooperatives. Expansion of past two years
throughout the poultry industry is
coming to a close for the present.

It appears we will have a break-even

year with El Niflo to look forward to.

Region 2-Southern High Plains

Wheat planting is being delayed
due to lack of rain. This will prevent
early grazing for stocker cattle. Cotton
crops look good, although they are late
planted. If we receive an early freeze,
some crops (especially dryland) will be
damaged. Cow/ calf prices are the
brightest spot we have.
Cotton crop prospects look better
than they have in three years. Borrowers need to catch up in order to stay
in business.

Region 5-Cross Timbers
,_

Current milk prices, which are at
the same level as milk prices were 10
years ago, have been devastating to the
dairy industry. Yesterday's income will
not pay for today's production cost.

Land values are trending up. This
will stop if we get back into a severe
drought.
Ranchland for recreation continues
to push prices upward. Stock market
gains have an effect on buyers.

Region 7-East Texas

Region 1-Northern High Plains

Region 4-Southern Low Plains

Region 10-South Texas

Farmers are preparing land for small
grains. Milk prices remain too low for our
dairy producers to make profits.
Wheat pasture customers have not
purchased calves due to lack of moisture
and no wheat grazing. In fact, 90 percent of wheat has not been sown due
to lack of rain.

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

Overall cotton crop is good to
excellent in this area. Farmers are
currently scrambling to prepare cotton
for a quick harvest. The weather forecasts for above-normal winter precipitation have farmers concerned that the
harvest will not be quick enough to
avoid the inclement weather.

RELEASE

Additional Details Continued
(Continued from page 1)

•

Eighty-six percent of respondents in the South Texas region
and 58 percent in the TransPecos and Edwards Plateau
region reported an increase in
the demand for loans in the
third quarter. Forty-three percent
of the responding bankers in the
East Texas region reported less
demand for loans.

•

Fifty-seven percent of responding bankers in the South Texas
region expect an increase in the
volume of non-real estate farm
and feeder cattle loans during
the next three months compared
with the same period a year
ago. Fifty-five percent of respondents in the Central Texas
region and 46 percent in the
Northern High Plains region
expect an increase in the
volume of crop storage loans.
Forty percent of the reporting
bankers expect an increase in
farm machinery loans, while 47
percent in the Cross Timbers
region expect a decline.

•

Fifty percent of responding
bankers in the Eleventh District
would like to increase the
volume of loans available to
farmers and ranchers.

Region 8-Central Texas
-

After good rains , dry conditions
have returned and operators are seeking advice on winter pasture preparation. Good prices gave encouragement,
but prices are starting to slip along
with enthusiasm for wintering calves.
After beneficial rains earlier this
year, the last six weeks have been very
dry and hot, hindering field preparation
for winter forages. The cattle market is
still healthy, and we have an abundant
supply of hay at reasonable prices.
Real estate prices are hard to
judge, as most land was taken off the
market due to oil and gas activity.
March, April and May were wet, wet,
wet. The last half of June, July and
August were dry, dry, dry. Crop yields
for early corn were good . Crop yields
for late corn were bad. Cotton is a
disaster for the second year in a row.
Rice is 15 percent to 20 percent below
1996 production levels on the first
crop. It is fully 10 percent below the
three-year running average. The
second crop average is about 35 percent of the total.

Full text of Agricultural Survey : Third Quarter 1997

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