Full text of Agricultural Survey : Third Quarter 2002

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STATISTICAL RELEASE
I

R E S E R V E

B A N K

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
Twenty-four percent of those
surveyed experience lower loan demand.
Percent
100

Third Quarter 2002
The Third Quarter Survey of Agricultural
Credit Conditions indicated that Eleventh District
bankers anticipate slightly improved financial
conditions in coming months. The improved outlook was attributed to favorable summer growing
conditions and the passage of the 2002 Security
and Rural Investment Act. However, some bankers
are worried about the lingering effects of the 2001
crop shortfall. Passage of the farm bill may have
a positive effect on land values, as near-term revenue prospects for some producers have improved.
Competition from alternative land use continues
Quarterly Suroey of
to bid up land values as well. Seventeen percent
of bankers expect an increase in land values over
Agricultural Credit
the next three months, up from only 7 percent a
Conditions is compiled from year ago. (See page 4 for bankers' comments.)
Here are additional details from the survey:
a survey of Eleventh District
• Nineteen percent of bankers reported
agricultural bankers. This
greater loan availability in third quarter 2002 than
the previous year, down slightly from 22 percent
publication is prepared by
in third quarter 2001. Fifteen percent of responthe Federal Reserve Bank
dents experienced increased loan demand over
a year ago, reversing a downward trend, which
of Dallas and is available
began in fourth quarter 2001.
• Bankers report that there has been no easwithout charge by writing
ing of lending standards, as collateral requirements
to the Research Department,
have remained relatively unchanged from a year
ago.
Eighty percent of respondents reported the
Federal Reserve Bank of
same collateral requirement compared with a
Dallas, P.O. Box 655906,
year earlier, up slightly from 77 percent in third
quarter 2001.
Dallas, TX 75265-5906,
• Banks' cost of funds declined another 18
or by telephoning
basis points this quarter to an average rate of 2.4
percent. The cost of funds rate began its decline
(214) 922-5254. It is
in first quarter 2001 and is currently the lowest in
more than 20 years.
available on the web at
• The percentage of bankers expecting inwww.dallasfed.org.
creased loan volume over the next three months
rose in all categories except farm machinery.
Twelve percent of respondents expect farm real
For questions regarding
estate loans to grow in the fourth quarter, up
from 9 percent who expected an increase for
information in the release,
the third quarter; 10 percent expect feeder cattle
contact John Thompson,
loans to increase, up from 5 percent last quarter.
• Data show that the number of agricultural
(214) 922-5191.
borrowers has dropped 15 percent over last
quarter.

01 :"97

01:'98
Less

01 :'99

•

Same

01:'00

•

01:'01

01:'02

Greater

Funds Available for Additional Lending
Ten percent of bankers cite
less funding availability.
Percent
100

0
01 :'96

01 :'97

01:'98
Less

01:'99

• Same

01:'00

•

01 :'01

0 1:'02

Greater

Rate of Loan Repayment
Seventy-two percent of respondents
indicate no change in loan repayment rates.
Percent
100

0
01 :'96

01:'97

01:'98
Less

0 1:'99

• Same

0 1:'00

•

0 1:'01

Greater

0 1:'02

STATISTICAL RELEASE

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

Loan-Deposit Ratios at Survey Banks

Average actual and desired ratios
60

Percent
~~~~~~~~~~~~~~~~-70

60
55

50
0
01 :'96

01 :'97

01 :'98

Less

0 1:'99

•

Same

01 :'00

•

01 :'01

01 :'02

Actual Ratio

Greater

Amount of Collateral
Eighty percent of respondents
require the same levels of collateral.

35
Desired Ratio

2001 :3

2001 :4

2002:1

2002:2

2002:3

Percent
100

DISTRIBUTION OF LOAN - DEPOSIT RATIOS

Banks Reporting (Percent)
60

2001
Ratio

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

0
01 :'96

01:'97

0 1:'98

Less

0 1:'99

Same

01:'00

•

0 1:'01

0 1:'02

2002

Oct. 1

Jan. 1

April 1

July 1

Oct. 1

14
12
24
26
23

22
15
21
21
22

20
17
16
22
26

19
12
20
20
30

16
14
17
20
33

INTEREST RATE-FIXED

Greater

Total Agricultural Loans at
Eleventh District Banks
Total loan volume in the agricultural sector
slips in the second quarter of 2002.
Millions of dollars (seasonally adjusted)
5,600
5,400

Average Rate (Percent)
2001
Ratio

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

2002

Oct. 1

Jan. 1

April 1

July 1

Oct. 1

9.15
9.16
9. 18
8.52

8.31
8.37
8.45
7.98

8.23
8.30
8.23
7.99

8.14
8.19
8.24
7.82

8.08
8.08
8.10
7.79

5,200
5,000

INTEREST RATE-VARIABLE

4,800

Average Rate (Percent)

4,600

Ratio

4,200
4 ,000
3,800
3,600

2002

2001

4,400

+-~---.---.--.---.---.---,-----.-----r----.---,---,.----.----,..---r--,---,

•w·-~~w~~~~W•WOO~

Note: Some of the volatil ity observed in agricultural loan levels is due
to the acq uisition of several Eleventh District banks by banks
headquartered in other Reserve Districts.

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

Oct. 1

Jan. 1

April 1

July 1

Oct. 1

8.26
8.48
8.37
7.94

7.29
7.43
7.27
7.00

7.23
7.34
7.29
7.08

7.20
7.19
7. 19
6.95

7.03
7.13
7.10
6.77

ST.ATISTICAL RELEASE

CROPLAND-DRY LAND

Rural Real Estate Values
October 1, 2002
' 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.
NOTE: In recent years we have seen some agricultural land values driven up as a result of
urban expansion and land conversion to
recreational use. These inflated values were
sometimes omitted to reduce volatility in
reporting regions. Eventually the number
omitted grew so large as to threaten the
reliability of the data series. Therefore, we
are reinstating all reported land values. This
revision includes data reported from first
quarter 2001 through second quarter 2002.
Historic tables containing these data can be
found at http://www.dallasfed.org/
htm/data/about.html.

Region

Beventh Federal Reserve District

177

653

1.4

1.1

TEXAS
Northern High Plains
Southern High Plains
Nor thern Low Plains
Southern Low Plains
Cross Timbers
North Central Texas
East Texas
Central Texas
Coastal Texas
South Texas
T rans-Pecos and
Edwards Plateau

161
18
23
14
14
16
25
9
18
9
6

653
280
364
324
413
582
970
798
1,162
961
579

1.6
-0.9
0.6
-0.9

LO
-1.1
1.2
1.9
3.4
7.4
- 3.8

0.8
-0.1
4.3
- 4.2
0.5
-5.2
- 3.9
0.9
10.5
5.4
- 8.4

578

- 0.6

2.9

Northern Louisiana
Southern New Mexico

13
3

700
256

- 0.8
1.1

3.9
-1.0

CROPLAND-IRRIGATED

12
M EX IC O

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

8
9 Coastal Texas

10
11
12
13

Percent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

Region

NE W

Average
Value 2
Banks'
Third Quarter 2 002

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

Average
Value•
Banks'
Third Quarter 2002

P ercent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

121

778

-1.3

- 1.1

TEXAS
Nor thern 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

101
17
22
12
11
6
n.r.
4
8
4
5

715
582
687
523
643
861
n.r.
857
1,981
650
789

-2.0
-1.3
0.8
1.3
-0.8
- 3.3
n.r.
- 6.4
11.l
- 10.8
- 5.5

-1.9
- 1.8
3.6
- 3.1
-3.9
-9.0
n.r.
5.0
26.9
-9.6
-13.3

1,173

-6.3

-0.5

Nor thern Louisiana
Southern New Mexico

13
7

923
1,347

0.8
2.2

4.7
1.8

RANCHLAND

Eleventh District Real Land Values
Dry/and values increase 1.4 percent.
Irrigated land and ranch/and values decline
1.3 percent and 1 percent, respectively.

Region

Average
Value•
Banks'
Third Quarter 2002

P ercent Changes'
in Values from
Previous Previous
Quarter
Year

DISTRICT

192

477

- 1.0

2.7

1992 dollars per acre

TEXAS

1,600

Northern Hig h 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

175
17
18
14
12
17
26
17
20
10
5

561
191
181
199
318
661
958
874
1,340
808
664

0.1
0.2
2.5
- 1.4
1.6
0.2
0.9
-1.8
3.8
3.6
- 1.3

4.0
0.4
14.2
-2.3
5.5
3.0
2. 1
-0.7
8.3
5.9
8.3

459

- 1.4

1.6

10
7

622
236

- 7.9
- 7.8

- 15.1
- 4.4

1,400
1,200
1,000
Irrigated
800

600
400
200

_,..
_/

....

Dl)lland

./"

Ranch land

...

Northern Louisiana
Southern New Mexico

STATISTICAL RELEASE

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

Region 1-Northem High Plains
Most producers need an additional government payment this year. Quite a few producers have had to request additional operating funds to carry them through harvest.
Sustained drought conditions adversely
affect value. Commodity prices are low. There
is concern over water rights and the potential
effect of nonagricultural commercial use of
underground supply.
Abundant rainfall should provide adequate wheat pasture; plus, the cattle market is
gaining strength. It could be a positive first
and second quarter for 2003.

Region 2-Southem High Plains
General lending practices have not varied
from last year. Growth and increased volume
are seen in cattle lending. Bank margins have
improved from a year ago.
Irrigated cotton and peanut yields will
surpass expectations. The dryland cotton crop
will be disappointing. Conditions are stable,
with few forced liquidations. Little land is
available for purchase or rent. Prospects for
federal disaster assistance appear to be
improving. This would greatly assist many
growers still trying to overcome the poor 2001
crop. Cattle markets have stabilized.

Region 3-Northern Low Plains
Land values are generally supported by
the increase in recreational owners. We could
see changes in real estate after the farm bill is
finalized.
Crops are late. With late frost and additional rain, the cotton crop could be average
or above. Also, irrigated peanuts are above
average.

Region 4 -Southem Low Plains
After the relatively wet summer, pastures
have come back with fairly good growth.
Rangeland [values] in this area have increased
dramatically due to the sale of several large
acreages to wealthy out-of-state buyers interested in recreation. Prospects look good for
wheat yield, but prices are depressed.

Region 5 - Cross Timbers
Our area has good rains, and most stock
tanks are full. Wheat grounds have been pre-

pared and fertilized. Our ranchers and farmers
are starting to buy stocker calves. Cattle prices
in some areas have gone up by $15 to $20.
Other areas have had a slight increase in cattle
prices.
Ranchland values continue to be affected
by proximity to major metropolitan areas.
The new farm bill should help. Also,
there would be an increase in wheat prices if
we could get out of the karnal bunt quarantine.
We still need runoff water to replenish
stock tanks and area lakes. Farmers are waiting for moisture before sowing wheat.

Region 6-North Central Texas
Overall, crop production yields have been
good. Prices for grains are 25 to 35 percent
above last year. However, I am convinced
when all income for the year is in, farm
income will be down 15 to 20 percent from
2001. Also, increases in grain prices will be
reflected in lower livestock prices to the producer. I expect slightly lower loan repayments
and tighter loan requirements for the coming
crop year.
We have completed the 2002 harvest,
which is about 60 to 70 percent of the average
yield for Williamson County. Farmers are looking forward to the new farm program. Land
values continue to increase, a result of more
land being developed and new people moving
to the area. Demand is very good for small
tracts at a premium price.
The increase in corn prices will help the
dryland corn farmers in Central Texas as well
as farmers of irrigated land in the Panhandle.

Region 7 -East Texas
Farming conditions continue to be difficult due to high production costs and minimal
returns on investments. Land values are excessive for production returns.
The cotton crop appears good, and harvest has started.
The dairy industry is very important to
Hopkins County, even though the number of
dairy farms has fallen from a peak of more
than 500 to about 160.

Region 8-Central Texas
This is a year to forget for the Coastal
Bend area. Not considering poor market prices
for crops, our production of corn, milo and
cotton is 60 to 75 percent less than normal,
and grades are poor.
We had rains this summer when they
were most needed. Most cattle producers have
plenty of hay going into the fall. Only the
most efficient producers are making any
money right now; the rest are just getting by.
September through November is the main selling period for feeder calves in our area. With
corn prices steadily increasing and the large
number of feeder calves being sold this fall , I
look for a substantial decrease in cattle prices.

Region 9-Coastal Texas
Wharton County is a major agricultureproducing county. Our corn and milo yields
were average, but grades were off because of
heavy rains prior to harvest. Rice yields were
excellent, but there is a limited market and a
depressed price. Our cotton crop is mostly
excellent; however, recent rains from
Hurricane Faye will hurt the grades on most
remaining cotton in the fie lds.

Region 10-South Texas
Rainfall has been great over the past
three months. We have received over 30 inches. Some of the crops did wash, but the benefit has been greater than the loss. We are
going into the fall in great shape.

Region 11-Trans-Pecos and
Edwards Plateau
We have received localized rains in the
Big Bend country that have greatly helped our
pastures. It is still dry in many places, though.
Availability and cost of water will be critical next year.
Dairy prices are a very big concern. The
drought has forced many ranchers to liquidate. Cattle are in poor to fair condition.

Region 12-New Mexico
Real estate subdivision and water issues
are driving the ranch real estate market.
The severe drought continues. Our local
irrigation district is out of water in the reservoir.
For the most part, all crops appear better
and are priced better than last year. Range
(cattle) conditions remain very dry, and many
cattle are being sold or moved out of the
country.
Land values vary. Some irrigated land is
sold at industrial prices because of water values.

Region 13-Louisiana
The local economy depends heavily on
agriculture. Pricing and the yield of crops in
past years have placed a heavy burden on
local farmers. Risk on farm loans is greater
than in the past, resulting in fewer crop loans
funded.
Agricultural land values continue to be
driven by recreation-related sales.
Late summer rains increased grass base
and hay yields. We expect producers to buy
feeder cattle for fall and winter grazing in our
area.

Full text of Agricultural Survey : Third Quarter 2002

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