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S T A T I S T I C A L
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Agricultural Credit Conditions at
Survey Banks in the Eleventh District
Demand for Loans
Nineteen percent of bankers cite an uptick in loan
demand.

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

Percent
100

80

Third Quarter 2008

Quarterly Survey of
Agricultural Credit
Conditions is compiled from
a survey of Eleventh District
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 Laila Assanie,
(214) 922-5191.

The third quarter survey found continued
apprehension about farming and ranching
conditions in the Eleventh District agricultural
community. A slightly higher share of bankers
cited declining loan repayment rates, rising requests for loan renewals and extensions, and an
increase in collateral levels compared with last
quarter. Operating margins remained lackluster,
and a few bankers expressed concern that high
fuel, fertilizer and feed costs would affect producers’ credit risk.
On the production side, Hurricanes Ike
and Gustav flooded parts of Coastal Texas and
Northern Louisiana, causing widespread crop
damage and livestock losses in the affected areas. Despite good late-summer and early-fall
rains that boosted crop yields in some areas—
especially in the Texas Plains—the dry spell
lingered in Central Texas, hurting livestock and
crop production.
Additional highlights from the survey:
• Farmland values rose at a slower pace
and sales activity weakened. About 15 percent
of bankers expected farmland values to decline
in the third quarter, compared with 5 percent
in the previous two. Additionally, 97 percent of
respondents foresee flat or weaker demand for
farm real estate loans, up from 87 percent in
second quarter 2008.
• Overall loan demand was mixed during
the quarter. Income from oil and gas leases on
farmland reduced loan demand in mineral-rich
regions, while crop and livestock damage resulting from the drought and hurricanes spurred
lending activity in others.
• High fuel, fertilizer and feed costs have
compelled farmers to limit purchases of farm
equipment and ranchers to curtail herd expansion. More than 90 percent of responding bankers anticipate steady or lower demand for feeder
cattle and farm machinery loans over the next
three months.

60

40

20

0
1Q:02

1Q:03

1Q:04
Less

Same

1Q:06

1Q:07

1Q:08

Greater

Funds Available for Additional Lending
Funds availability remains steady, say 75 percent
of respondents.
Percent
100

80

60

40

20

0
1Q:02

1Q:03

1Q:04
Less

1Q:05
Same

1Q:06

1Q:07

1Q:08

Greater

Rate of Loan Repayment
Eleven percent of banks report lower loan repayment rates.
Percent
100

80

60

40

20

0
1Q:02

1Q:03

1Q:04
Less

A1

1Q:05

1Q:05
Same

1Q:06

1Q:07

Greater

1Q:08

S T A T I S T I C A L
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Agricultural Credit Conditions at Survey Banks in the Eleventh District
Renewals or Extensions of Loans
Loan renewals and extension requests have
increased as indicated by 14 percent of reporters.
Percent

Loan-to-Deposit Ratios at Survey Banks

100

Average actual and desired ratios

Percent
75
70
65
60

80

60

40

20

55
50
45
40

Actual ratio

0
1Q:02

1Q:03

1Q:04

1Q:05

Less

1Q:06

Same

1Q:08

1Q:07

Desired ratio

2007:3

2007:4

2008:1

2008:2

2008:3

35

Greater

Amount of Collateral
Thirteen percent of respondents note an increase
in collateral requirements.
Percent
100

Distribution of Loan-to-Deposit Ratios				

80

Banks Reporting (Percent)
60

2007
		

40

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

20

0
1Q:02

1Q:03

1Q:04

1Q:05

Less

1Q:06

Same

1Q:08

1Q:07

2008

Oct. 1

Jan. 1

Apr. 1

Jul. 1

Oct. 1

17
14
17
23
30

18
12
17
28
25

24
12
18
22
24

24
10
15
18
32

16
12
15
25
33

Interest Rate—Fixed				

Greater

Average Rate (Percent)

Total Agricultural Loans
Agricultural loan volumes expand, after declining
slightly in the first quarter.

2007
		

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

Millions of dollars (seasonally adjusted)
7,800

2008

Oct. 1

Jan. 1

Apr. 1

Jul. 1

Oct. 1

9.35
9.55
9.24
8.49

8.91
9.05
8.66
7.92

7.78
7.96
7.74
7.24

7.52
7.81
7.63
7.20

7.42
7.56
7.49
6.87

7,300

Interest Rate—Variable				

6,800

Average Rate (Percent)

6,300

2007

5,800

		

5,300

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

4,800
4,300
3,800
’97

’98

’99

’00

’01

’02

’03

’04

’05

’06

’07

’08

A2

2008

Oct. 1

Jan. 1

Apr. 1

Jul. 1

Oct. 1

9.22
9.41
9.23
8.61

8.67
8.73
8.48
7.93

7.20
7.41
7.32
6.66

6.96
7.09
6.91
6.54

6.78
6.91
6.99
6.63

S T A T I S T I C A L
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Rural Real Estate Values

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R E L E A S E

B A N K
O F
D A
CROPLAND­—DRYLAND				

October 1, 2008
1

Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation.
4
Increase in the percent change from 2007 to 2008 		
reflects new reporters in 2008.
5
Large percentage change reflects increase in reported
land values in the region.
n.a.—Not published due to insufficient responses but
included in totals for Texas and district.

Region

2

1
3
N E W

2

M E X I C O

4

L O U I S I A N A

5

13

6

7

Region

8

9

1
2
3
4
5
6
7

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

8
9
10
11
12
13

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

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Percent Change3
in Value from
Previous
Previous
Quarter
Year

Average
Banks1
Value2
Third Quarter 2008

12
12.9
15.7
11.3
24.3
4
40.5
4
37.8
9.6
5.7
14.0
26.5
n.a.
–4.3
14.7
1.2

Percent Change3
in Value from
Previous
Previous
Quarter
Year

DISTRICT
84
1,363
0.8
				
TEXAS
70
1313
0.6
Northern High Plains
16
1081
0.1
Southern High Plains
15
1027
0.0
Northern Low Plains
5
959
1.5
Southern Low Plains
5
1,334
7.5
Cross Timbers
4
2,384
5.9
North Central Texas
n.a.
n.a.
n.a.
East Texas
n.a.
n.a.
n.a.
Central Texas
11
2,992
0.7
Coastal Texas
4
1,885
7.2
South Texas
n.a.
n.a.
n.a.
Trans-Pecos and				
Edwards Plateau
6
1,920
–3.5
				
Southern New Mexico
8
1,746
1.9
Northern Louisiana
6
1,678
2.0

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CROPLAND­—IRRIGATED				

T E X A S

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DISTRICT
116
1,310
1.5
				
TEXAS
103
1,327
1.9
Northern High Plains
16
454
1.3
Southern High Plains
15
491
–0.3
Northern Low Plains
7
577
2.6
Southern Low Plains
6
880
7.0
Cross Timbers
12
1,367
2.6
North Central Texas
12
2,302
4.6
East Texas
7
1,524
–2.0
Central Texas
16
2,569
3.0
Coastal Texas
5
1,670
3.0
South Texas
n.a.
n.a.
n.a.
Trans-Pecos and				
Edwards Plateau
5
1,041
–4.6
				
Southern New Mexico
7
405
5.2
Northern Louisiana
6
1,208
–3.3

Eleventh Federal Reserve District

12

Average
Banks1
Value2
Third Quarter 2008

L

6.7
12.1
14.5
17.1
15.8
5
60.7
27.4
n.a.
n.a.
14.2
20.8
n.a.
7.7
-22.0
10.2

RANCHLAND				
Eleventh District Real Land Values
Ranchland values edge down.

Region

2000 dollars per acre
1,200

Irrigated
Dryland

1,000
800

Ranchland
600
400
200
0
’98

’99

’00

’01

’02

’03

’04

’05

’06

’07

’08

Average
Banks1
Value2
Third Quarter 2008

Percent Change3
in Value from
Previous
Previous
Quarter
Year

DISTRICT
126
1,141
–0.8
				
TEXAS
113
1,429
–1.1
Northern High Plains
17
358
–0.2
Southern High Plains
14
412
4.3
Northern Low Plains
7
567
–4.1
Southern Low Plains
6
879
9.0
Cross Timbers
12
1,863
2.2
North Central Texas
14
2,390
2.0
East Texas
8
1,681
–7.8
Central Texas
18
3,370
1.9
Coastal Texas
4
1,405
–2.9
South Texas
n.a.
n.a.
n.a.
Trans-Pecos and				
Edwards Plateau
11
1,267
–3.7
				
Southern New Mexico
8
316
2.4
Northern Louisiana
5
1,014
5.8

3

2.5
2.3
12.3
22.9
22.0
28.9
25.0
13.8
-16.7
10.4
18.9
n.a.
-9.4
5.3
8.2

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Third Quarter
2008 Comments

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Asking prices for land are still high, and
fewer sales are occurring. High feed,
fertilizer and fuel costs are squeezing
producers, especially dairies.
Region 6—North Central Texas
The area is in need of rainfall.

District bankers were asked for additional comments concerning agricultural land values and credit conditions.
These comments have been edited.
Region 1—Northern High Plains

Corn and other summer crops are
looking good, as growing conditions
are excellent.
Land costs are still rising, although at a slower pace than the
previous 18 months. The corn harvest
is starting with above-average yields.
Wheat planting is delayed due to
increased input costs and insect pressure. Cows are in excellent condition,
with good calf weaning weights.
The corn and silage fall harvests
have started. Preliminary yields are
good, although they are slightly lower
than in 2007. Farmers expect a decent
year with good commodity prices.
The outlook for stocker and feeder
cattle continues to be bleak.
Grain prices are high. New dairies are coming into the Panhandle
area.
The vast majority of landowners
in this county have extensive oil and
gas income, eliminating any need for
borrowing.
Region 2—Southern High Plains
Recent rains have made dryland
prospects look good. The cotton crop
will be dependent on the fall harvest.
Region 3—Northern Low Plains
Irrigated crops are good. We received good rains recently, as much as
7 inches. But it will take time to know
if dryland crops will react and have
time to mature.

Region 7—East Texas
Land values have retained their
asking price, but due to the negative
real estate lending events, land is not
moving as fast as in the past. Real estate values do not accurately reflect
the value of agricultural property.
The cost of production continues to
rise, but commodity prices have been
favorable—resulting in about the same
margin of profit.
Region 8—Central Texas
Ag credits will be difficult this year.
The crops from west of Victoria
to George West were well below normal, primarily due to the dry summer
weather. With less carryover and crops
being more expensive for 2009, credit
risk for agricultural loans will have a
much greater probability of increasing.
Even with two major hurricanes
this summer, we still did not receive
any rain. Portions of Lavaca, Gonzales
and Fayette counties are extremely dry.
Tanks are still dry, and grass is nonexistent in some areas. Feeding with hay is
being done daily. Cattle prices remain
good. The economic news will determine what happens in the next three
months.
The dry spring and early summer
resulted in below-average corn yields.
Rice yields will result in profits, despite
the highest input costs in history.
Drought conditions persist in much
of our ag territory. The cost of feed,
fertilizer and fuel are all higher and
putting tremendous pressure on the ag
producer. There are not many left who
are making a living solely from the
farm.
Region 9—Coastal Texas

Region 5—Cross Timbers
Timely rains in August have greatly
improved hay and pasture conditions.

We are unable to obtain land values due to Hurricane Ike. Salt water
covered most of the land. Renewals and
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extensions requests are coming in due
to the storm.
Region 11—Trans-Pecos and
Edwards Plateau
High fuel, feed and production
costs are keeping pressure on ag producers in the western Hill Country.
Fortunately, livestock prices have remained strong. Some areas received
some rare July and August rainfall.
Overall, however, 2008 does not look
like a year to write home about. The
real estate market has slowed somewhat, but prices have not fallen.
Recent rains have helped prospects
for a good year, but continued rainfall
is needed before increases in herd sizes
can be implemented. Also, area ranchers are increasingly relying on hunting and oil and gas income to counter
livestock industry losses resulting from
drought, high fuel prices, predators and
feed cost increases that are driven in
part by the ethanol industry.
Region 13—Northern Louisiana
The recent rainfall from Gustav
has flooded the area crops in many
places. We received as much as 15 to
27 inches. The rice and corn that is still
in the field probably will not be harvested and is considered a complete
loss. Soybeans that were not mature
and harvested may still be salvaged, but
area elevators are selective in accepting
damaged crops to fill contracts. Cotton
that did not have open bolls may still
be harvested, while older cotton may
not be. Late soybeans and cotton may
have an opportunity to be salvaged. At
this point, time and weather will tell the
rest of the story.