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STATISTICAL RELEASE

F E D E R A L

R E S E R V E

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
·cultural
Credit Conditions in the
Eleventh Federal Reserve District

Demand for Loans
Eighteen percent of those surveyed
see increased loan demand.
Percent
100

80

Third Quarter 2001
60

The Third Quarter Suivey of Agricultural
Credit Conditions revealed a decline in the percentage of bankers experiencing increased yearover-year loan demand. Only 18 percent of
respondents realized increased loan demand,
compared with 26 percent in the third quarter of
2000. Bankers say many farmer clients are
already highly leveraged, and minimal cash flow
and liquidity among producers are making it difficult to approve new loans. Consequently, govQuarterly Survey of
ernment payments, bankers say, are as imperaAgricultural Credit
tive to suivival as ever. (See page 4 for bankers'
comments.)
Conditions is compiled from
Here are additional details from the suivey:
a survey of Eleve nth District
• While the price of farmland now being
used in housing development and recreation
agricultural bankers. This
continues to be bid up, the value of land used
publication is prepared by
exclusively for agriculture has declined for two
the Fede ral Reserve Bank
to three quarters in a row. This result is no surprise, because persistently low commodity
of Dallas and is available
prices, weather-induced production hang-ups
without charge by writing
and heavy debt loads have combined to diminto the Research Department, ish cash flow and reduce return on land assets.
Only 7 percent of respondents expect an
Fede ral Reserve Bank of
upward trend in farmland prices in the next
Dallas, P.O . Box 655906,
three months, down from 16 percent who
thought so last year.
Dallas, TX 75265-5906,
• Funding availability was better in the
or by telephoning
third quarter as 22 percent of respondents cited
(214) 922-5254. It is
increased loanable funds relative to a year earlier.
This figure was up from the 13 percent
available on the web at
recorded last year. Virtually none of the banks
www.dallasfed.org.
refused or reduced farm Joans during the third
quarter on the basis of a funding shortage.
• Interest rates charged by banks are
For questions regarding
down universally. Additionally, the average cost
information in the release,
of funds for bankers registered 3.6 percent,
down from 4.2 percent last year. The average
contact John Thompson,
number of farm and ranch borrowers for each
(214) 922-5191.
bank is down from 121 last year to a current
level of 108.

40

20

0
01 :'95

01 :'96

01 :'97
Less

01 :'98
Same

01 :'99
•

01 :'00

01 :'01

Greater

Funds Available for Additional Lending
Twenty-two percent of bankers
have increased funding availability.
Percent
100

80

60

40

20

0
01:'95

01 :'96

01 :'97
Less

01:'98
Same

01 :'99
•

01 :'00

01 :'01

Greater

Rate of Loan Repayment
Five percent of respondents experience
an increased loan repayment rate.
Percent
100

80

60

40

20

0--~

01:'95

01 :'96

01 :'97
Less

01 :'98
Same

01 :'99
•

01 :'00
Greater

01:'01

STATISTICAL RELEASE

Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Seventeen percent of bankers
see increased renewals and extensions.
Percent
100

Loan-Deposit Ratios at Survey Banks

80

Average actual and desired ratios
60

Percent

- - - - - - - - - - - - - - - - - - 70
65

40

60
55

20

50
0
01 :'95

01:'96

01:'97

Less

01:'98

Same

01:'99

•

01:'00

01:'01

Greater

Amount of Collateral
Seventy-seven percent report no
changes to collateral requirements.

II
II

45

Actual Ratio

40
35

Desired Ratio

2000:3

2000:4

2001 :1

2001 :2

2001 :3

Percent
100

DISTRIBUTION OF LOAN - DEPOSIT RATIOS

80

Banks Reporting (Percent)
60

2000
Ratio

40

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

20

0
01 :'95

01 :'96

01 :'97

Less

01 :'98

Same

01 :'99

•

01 :'00

01:'01

Oct. 1

J an. 1

20
17
25
16
23

19
19
26
19
17

2001
Apr. 1
Jul. 1

21
16
21
19
23

18
15
24
16
28

Oct. 1

14
12
24
26
23

INTEREST RATE- FIXED

Greater

Average Rate (P ercent)

Total Agricultural Loans at
Eleventh District Banks
Loan volume declines for the second quarter in a row.
Millions of dollars (seasonally adjusted)
5,600
5,400

2000
Ratio

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

Oct. 1

Jan. 1

200 1
Apr. 1
Jul. 1

10.99
11.04
10.79
10.14

11.00
11.03
10.77
10.15

10.29
10.36
10.14
9.53

9.65
9.65
9.51
9.04

Oct. 1

9.15
9.16
9.18
8.52

5,200
5,000

INTEREST RATE-VARIABLE

4,800

Average Rate (Percent)

4,600

2000

4,400
4 ,200
4,000
3,800
3,600 +---.---r---,---,---,.---,..--,..-~-r---r----r--,----.-.----r---->
'86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01

Note: Some of the volatility observed in agricultural loan levels is due
to the acquisition of several Eleventh District banks by banks
headquartered in other Reserve Districts.

Ratio

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

Oct. 1

J an. 1

2001
Apr. 1
Jul. 1

11.05
11.20
10.93
10.38

10.77
10.83
10.55
10.00

9.98
10.15
9.93
9.32

8.83
9.08
8.96
8.53

Oct. 1

8.26
8.48
8.37
7.94

STATISTICAL RELEASE

CROPLAND-DRY LAND

Rural Real Estate Values
October 1, 2001

Region

' 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.

Average
Banks'
Value2
Third Quarter 2001

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

166

611

-1.0

2.0

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

153
21
17
12
12
14
22
11
17
12
3

610
282
337
340
409
620
969
742
934
737
654

-0.9
1.7
-2.6
1.0
0.4
3.4
0.1
6.2
-5.7
-10.2
6.5

1.6
-4.6
2.9
8.7
4.1
8.6
2.6
18.1
-15.7
-8.0
29.0

12

543

-8.2

n.r.

9
4

665
262

-2.3
1.5

7.3
4.4

2

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

Eleventh Federal Reserve District

Northern Louisiana
Southern New Mexico

CROPLAND-IRRIGATED

12
NEW

MEXICO

Region

DISTRICT

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

1
2
3
4
5

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

Average
Value2
Banks'
Third Quarter 2001

Percent Changes3
in Values from
Previous Previous
Quarter
Year

109

718

-2.9

-4.4

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

94
18
16
10
10
4
n.r.
5
9
6
n.r.

693
571
638
540
662
996
n.r.
795
1,480
733
n.r.

-1.9
-1.0
-2.6
2.5
-2.3
3.0
n.r.
1.8
0.2
-11.6
n.r.

-2.0
-6.9
-2.6
9.1
4.2
22.6
n.r.
-1.7
-17.8
-12.4
n.r.

12

734

-10.0

-1.7

Northern Louisiana
Southern New Mexico

8
7

876
906

-1.6
-10.0

5.7
-21.6

RANCHLAND
Region

Eleventh District Real Land Values
Land values decline for all
three types of agricultural land.
1992 dollars per acre
1,600
1,400

~

1,200
1,000

800
600

....

Dryland

400
200
0

Ranchland

•m~~•w•~•~•m•~•w~•m~

Average
Banks'
Value2
Third Quarter 2001

Percent Changes•
in Values from
Previous Previous
Quarter
Year

DISTRICT

188

401

-2.5

2.6

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

168
20
12
12
11
15
23
18
22
12
3

506
188
155
197
286
657
928
871
980
627

668

-2.3
-1.4
0.5
-2.6
4.6
2.6
1.0
3.4
-7.7
-8.9
0.5

4.2
-2.7
14.9
3.8
-2.7
20.2
7.3
10.1
-3.8
0.6
14.0

20

401

-5.1

-2.4

Northern Louisiana
Southern New Mexico

11
9

682
98

-9.2
-5.0

13.5
-17.2

STATISTICAL RELEASE

Third-Quarter
Comments

Region 3-Northern Low Plains

Region 7 - East Texas

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

Conditions have been extremely dry in
July and August. Recent rains have helped
grass and possibly some peanuts and cotton.
Dryland cotton and peanuts will be short
again this year.
Commodity prices are too low in relationship to operating expense. Row crop farming
in the rolling plains area is marginal at best.
The cattle bu iness is still good.

Excessive rainfall has badly impacted the
cotton harvest. Yields and grades will be bad.
Land values have increased due to the
large volume of oil and gas activity in the
county.
Cropland values will have to decline for
production to justify cost. Credit conditions
remain fairly stable, with cattle operation
being the strongest market.

Region I-Northern High Plains

Region 4-Southern Low Plains

Region 8-Central Texas

Diversifying into cattle has helped. You
cannot continue betting the farm on a particular crop unless you have it presold. You have
to do your homework to see if what you are
going to grow is feasible.
Most operations do not produce cash flow
without government subsidies. If water rights
are sold and underground water is shipped to
metropolitan areas, current livestock watering
facilities will become inoperable.
Unless commodity prices increase dramatically or price supports increase, we will lose
more than 50 percent of all farmers in the
area. This will, in turn, ruin the local economy.

Until agricultural prices on farm products
are more stable, the market for agricultural
land will remain low.
Most cattlemen have had to sell large
numbers of cows because range has no grass.
Tanks and lakes are in very poor shape.
Things are not all bad, but from the
standpoint of agriculture, it's not too rosy.
The high value of the U.S. dollar is a
challenge for cotton exports.

Recent rains provide optimism for ranchers.
Leasable and sellable water rights have
pushed several property sales prices well
above $2,000 per acre.
Very difficult. Most farmers are highly
leveraged and have minimal liquidity, making
it difficult to underwrite farm loans at this
time. Nonperforming loans are on the
increase. Cattle and dairy loans remain in
good standing.

Region 5-Cross Timbers

Region 9-Coastal Texas

Most of our customers are part-time farmers and ranchers and maintain out ·ide income.
Over the last few years, ranchland values
have been significantly impacted both in value
and cash rent due to the influx of Dallas-Fort
Worth metroplex hunters. With the downturn
in the economy, we expect these values to drop.

Improved equity is resulting from reduced leverage/ debt. Reduced borrower interest rates have positively impacted profitability.
Most of our farmers and ranchers have
become very conservative. They are farming
less and borrowing less money.

Region 2-Southern High Plains
Overall outlook for the 2001 crop is poor
unless we get an FSA disaster payment for
farmers who lost crops from hail and drought.
Mother cow numbers continue to
decrease due to the drought. Some estimates
place the number at 20 percent of normal
stocking rates.
Cotton prices are horrible. Nevertheless,
the United States continue to import cheaper
cotton from other countries. We will have
more farmers going out of business this year
than ever before.
Drought conditions have hurt yields significantly. Prices of commodities are down. If
these conditions continue, it won"t be long
before farming and ranching are damaged
beyond repair. Banking is limited in what we
can offer as support.
The farm economy in West Texas is
extremely depressed. Unless we receive a new
farrn bill for 2002, there could be a very large
number of foreclo ures and bankruptcies.
The agricultural ituation is very frail today.
It appears the current farm bill may not
make it through Congress. Look for severe
and widespread problems. Fraud will be on
the increase.

Region 11-Trans-Pecos and
Edwards Plateau

Region 6-North Central Texas
_ ,_

[Milo and corn] prices have improved
since 2000. Cattle prices remain high. These
factors are keeping agricultural land values
steady. We have had four or five farms purchased by farmers from the high plains of
Texas due to excessive irrigation costs.
Strong calf prices have helped cow/ calf
producers reduce term and long-term debt.
Soil moisture is good for winter wheat producers. Overall, the local farm economy is in
good shape.
Good grain crop in 2001. The cotton crop
will possibly be a total loss due to recent rains
in excess of 10 to 12 inches. Insurance companies are currently evaluating whether they will
zero out all cotton.
Upward pressure on land values continues due to our location, which is commutable
to the Dallas-Fort Worth metroplex. Smaller
tracts sold recently are used primarily for
home sites and not for agricultural production.

Conditions are very dry, and the decrease
in livestock prices is putting pressure on our
producers.
Given current cotton prices, we feel the
best a producer can expect to do is cover
loan costs. This will not cover operating cost.

Region 12-New Mexico
Pasture conditions are satisfactory but not
great. It's going to be a tough winter. Feeder
prices have come down.
The dairy industry continues to expand
in this area.

Region 13-Louisiana
Some properties with approximately 30
to 40 acres of pastureland have sold for

$3,000 per acre. These sales are limited and
are in very desirable areas.