Full text of Agricultural Survey : Third Quarter 1999

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STATISTICAL

F E D E R A L

R E S E R V E

RELEASE
B A

D A L L A S

Agricultural Credit Conditions at
Survey Banks in the Beventh District

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

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

Third Quarter 1999

Quarterly Survey of
Agricultural Credit

The Third Quarter Survey of Agricultural
Credit Conditions showed fairly stable conditions compared with the second quarter.
Respondents reported no major changes in the
demand for loans and rate of loan repayment.
In many areas of the District, respondents
expect good crop yields, but a few areas have
been hurt by dry conditions. However, bankers
continue to worry about low commodity prices
and reported that some farmers are storing
crops in hopes of higher prices in future
months. (See page 4 for bankers' comments.)

Conditions is compiled from

Here are additional details from the survey:

a survey of Eleventh District

• Fewer bankers reported an increase in
the availability of funds for non-real estate farm
loans. Fifteen percent of responding bankers
reported a greater availability of funds, compared with 24 percent in the second quarter.

agricultural bankers. This
publication is prepared by
the Federal Reserve Bank
of Dallas and is available
without charge by writing
to the Research Department,
Federal Reserve Bank of
Dallas, P.O. Box 655906,
Dallas, TX 75265-5906,
or by telephoning
(214) 922-5254. It is
available on the web at
<www.dallasfed.org>.

For questions regarding
information in the release,
contact Sheila Dolmas,
(214) 922-5191.

0
ill~

ill~

Less

ill~

• Same

ill~

• Greater

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

• Since mid-1998, the number of bankers
expecting declining land values has increased.
In 1997 and early 1998, fewer than 10 percent of
responding bankers expected declining land
values. In the past year and a half, an average of
24 percent of bankers expected declining land
values in their areas. In the third quarter of
1999, 25 percent of bankers expected reduced
land values, 62 percent expected stable land
values and 14 percent expected increased land
values in their areas in the next three months.
• The typical variable interest rate charged
on intermediate and long-term farm loans
increased by 30 basis points in the third quarter,
while fixed rates increased by more than 20
basis points.
• The average number of farm and ranch
borrowers per responding bank increased
through the first nine months of the year to 115
borrowers in the third quarter.

0
01 :'93

01:'94

01:'95

Less

01:'96

• Same

01:'97

01 :'98

01 :'99

• Greater

Rate of Loan Repayment
The rate of loan repayment decreases for
27 percent of third-quarter respondents.
Percent
100

0
ill~

ill~

Less

ill~

• Same

ill~

• Greater

ill~

STATISTICAL

RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Twenty-seven percent of respondents report
increases in loan renewals or extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
60

Percent

- - - -- - - - - - - - - - - - 65
40

II II II II
., Ill Ill II

0
ill~

ill~

Less

• Same

ill ~

ill~

ill ~

• Greater

Amount of Collateral
Twenty-seven percent of respondents report an
increase in collateral requirements.

Actual Ratio

Desired Ratio

I I I I
I I I I
I I I I

1998:3

1998:4

1999:1

1999:2

40
35

1999:3

Percent
100

DISTRIBUTION OF LOAN-DEPOSIT RATIOS

Banks Reporting (Percent)
60

Ratio

1998
Oct. 1

Jan. 1

24
22
18
20
16

26
16
27
20
11

1999
Apr. 1
Jul. 1

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

0
01 :'93

01 :'94

0 1:'95

Less

01 :'96

• Same

01:'97

0 1:'98

0 1:'99

• Greater

Total Agricultural Loans at
Eleventh District Banks
Agricultural lending slows in second quarter 1999.
Millions of dollars (seasonally adjusted)
5,200
5,000

28
19
25
12
16

25
31
19
11
13

Oct. 1

26
22
21
14
17

INTEREST RA TES- FIXED
Average Rate (Percent)
Ratio

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

1998
Oct. 1

J an. 1

10.31
10.37
10.23
9.63

9.94
10.08
9.88
9.29

1999
Apr. 1
Jul. 1

9.91
9.99
9.75
9.18

9.99
9.98
9.82
9.28

Oct. 1

10.16
10.19
10.10
9.50

4,800

INTEREST RATES-VARIABLE

4,600

Average Rate (Percent)

4,400
4,200

Ratio

4,000

'86 '87 '88 '89 '90 '91

'92 '93 '94 '95 '96 '97 '98 '99

Note: Starting in May 1998, data previously reported by NationsBank of
Texas in the Eleventh District are reported by Bank of America in the
Fifth District.

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

19 98
Oct. 1

Jan. 1

10.21
10.31
10.24
9.68

9.78
9.92
9.73
9.19

1999
Apr. 1
J ul. 1

9.75
9.94
9.73
9.15

9.65
9.84
9.71
9.17

Oct. 1

10.06
10.17
10.01
9.47

STATISTICAL

RELEASE

CROPLANO-ORYLAND

1111'11 Real Estala - October 1, 1999

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
and varying number of reporting banks
should be used with caution.
All figures are preliminary.

Beventh Federal Reserve District

DISTRICT

114

570

- 0.5

1.2

102
13
15
7
12
5
16
4
14
3
4

565
281
320
308
386
569
816
741
915
731
484

- 0.9
-3.3
- 1.2
- 1.2
0.0
1.9
1.1
-2.1
- 0.7
-5.0
2.4

1.3
0.8
-4.7
-0.5
-6.2
9.2
-5.5
44.1
-10.8
1.2
2.7

539

- 1.0

-2.5

7
5

668

3.4
0.5

2.1
-31.6

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

248

CRDPLAND-IRRIGA TED

12
lllXICO

Region

I
2
3
4
5
6
7

Percent Changes3
in Values from
Previous Previous
Quarter
Year

TEXAS

Northern Louisiana
Southern New Mexico

NEW

Average
Value 2
Banks'
Third Quarter 1999

Northern High Plains
Southern High Plains
Northern Low Plains
Southern Low Plains
Cross Tunbers
North Central Texas
EastTexas

9
IO
11
12
13

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

Average
Value'
Banks'
Third Quarter 1999

DISTRICT

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

67
12
15

Northern Louisiana
Southern New Mexico

Percent Cbanges3
in Values from
Previous Previous
Quarter
Year

733

-2.7

-3.4

8
n.r.
n.r.
n.r.
8
n.r.
3

658
579
645
417
620
n.r.
n.r.
n.r.
1,568
n.r.
635

-3.2
0.3
- 1.1
- 0.4
- 3.9
n.r.
n.r.
n.r.
-14.7
n.r.
-2.5

-3.0
8.2
-0.3
-5.7
-3.8
n.r.
n.r.
n.r.
-2.3
n.r.
-5.5

884

0.8

-30.4

5
8

850
1,412

2.0
-1.2

0.4
-6.9

RANCHLAND

Region

Average
Value'
Banks'
Third Quarter 1999

Percent Changes3
in Values from
Previous Previous
Quarter
Year

Eleventh District Real Land Values
Land values fall from April to September of 1999.

DISTRICT

120

367

-4.0

-2.1

1992 dollars per acre

TEXAS

1,600

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

108
12
12
7
11
5
18
7
15
4
4

432
168
149
170
230
507
755
824
940
487
459

0.2
-4.9
5.8
0.0
- 7.2
2.2
3.6
3.6
- 1.4
- 5.6
- 0.5

-1.1
-0.1
8.2
5.6
-9.4
13.1
-1.5
26.8
-5.1
-20.7
-2.7

378

0.8

-4.l

4
8

500
178

-1.6
- 26.0

29.9
-9.1

1.400
1,200
1,000
800
600 - /

400
200
0

-... '

...

---

____ ,,,,,

Dryland

Ranchland

~m~u•w••m~mm~m•w~w

Northern Louisiana
Southern New Mexico

STATISTICAL

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

Region I-Northern High Plains
We need the word "parity"receiving prices that recover costsback in our vocabulary. It seems two
things are incompatible: good yields
and a good market.

Region 2-Southern High Plains
Crop prospects look very good at
this time, with only a small area hailed
out in the past month. Harvest is
beginning for cotton and should be in
full swing by mid- to late October. The
dryland crop looks especially good in
much of the area . Commodity prices
are still a big concern, with most
farmers reconciled to having to rely on
Loan Deficiency Program payments,
Agriculture Market Transition Act
payments and potential disaster
payments, all from the government, to
survive.
ome cotton has been killed, and
early harvests are showing a low grade
with some trash. Not enough has been
harvested to gauge the turnout. We
expect better overall production than
last year, but price is a factor. If Loan
Deficiency payments remain high, we
are looking at 60 to 63 cents on cotton.
No peanuts have been harvested, but
yields look good.

RELEASE

help when yields and prices are down,
but a crop will be made, compared
with no crop last year.
Our customers could use another
government bailout, but they would
rather have a long-term safety net,
through the multiperil crop insurance
program, and a price for their crops
and livestock that will help them
sustain their operations.
We continue to see stable land
values due to sales for recreational
purposes.

Region S--Cross Timbers
Conditions are very dry, and no
winter grain is up.

Region 6-North Central Texas
The area has suffered in past years
from drought and poor yields. This
year's yields are at an all-time high and
prices almost at an all-time low.
Farmers should be able to pay 1999
crop expenses, but they have very little
help with carryover debt.
Most area farmers had a good to
excellent yield on milo, corn and
cotton, but depressed prices have led
farmers to put most of it in storage.
Recent price increases on corn have
caused some optimism, but a more
permanent solution is needed for the
coming years.
I do not expect to see a borrower
being liquidated in 1999. Yields were
good but prices low. Ninety-five
percent of farmers will repay 1999
operating expenses and reduce longterm debt.

Region 9--Coastal Texas
The farm situation for rice is very
troubling. Prices have fallen well below
the cost of production. Even with
program payments, farmers are facing
operating losses this year. Without a
good increase in prices or some level
of support, little rice will be planted in
the spring of 2000. Thi may be the
area's worst farming situation ever.

Region 10--South Texas
We are still seeing strong demand
for recreational real estate, especially
for hunting. We need rain.

Region 11-Trans-Pecos and
Edwards Plateau
It is now very dry, and there is no
green feed. Prices for livestock are low,
and no relief is in sight. Outside
income continues to upport most
operations.

Region 12-Southern New Mexico
Above average summer rains have
improved ranch conditions considerably. The range is in its best shape in
many years, which is increasing local
demand for cattle. On the negative
side, the excess rainfall has intensified
crop disease in area chile crops,
lowering yields and increasing operating expenses.

Region 7-East Texas
1999 is proving to be a better crop
year than 1998; however, yields for
1999 are below average. Cattle markets
remain strong in our area.

Federal Reserve Bank of Dallas
Web Site

Region S--Central Texas
Region 4--Southern Low Plains
There is less demand, as no one
wants to spend any more money now.
Cotton farmers will let the freeze kill
the crops instead of doing so now
themselves. We just hope government
will come forward with more money to

Cattle prices have strengthened,
improving the financial picture for
ranchers; however, there is a gloomier
picture for our peanut and com
farmers. They have received no rain
since early to mid-July, devastating the
peanut crop, for which estimated yields
fell to 50 percent of average.

To find economic data,
banking research and
other useful information,
visit the Dallas Fed web site:

Full text of Agricultural Survey : Third Quarter 1999

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