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Ag r i c u lt u r a l S u rv e y

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

Demand for Loans
Loan demand continues to decline, but the index edges up in the third
quarter.
Index
100
80
60
40
20
0
–20
–40
–60
–80
–100

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2010

Funds Available for Additional Lending
Twenty-three percent of bankers note an increase in the availability
of funds.
Index
100
80
60
40
20

Third Quarter 2010
The third-quarter survey suggests continued confidence for agricultural conditions in the Eleventh District. Multiple regions benefitted from tropical-storm-driven rains, resulting in good planting
conditions and pasture growth. Reports indicate a good hay crop
and above-average grazing conditions. Cotton yields are expected to
be high and prices are elevated, providing solid margins for farmers.
Cattle prices strengthened further, boosting profits for livestock producers.
Strong production levels and increases in agricultural commodity
prices have several bankers optimistic about prospective farmland
values. Thirteen percent of respondents expect an increase over the
next three months, the highest share in two years. Current land values are stable or slightly up, although land sales remain subdued.
The Eagle Ford Shale region continues to see substantial leasing activity from oil and gas companies.
Some weakness in farm lending persists, although loan repayment
rates and requests for renewals or extensions stabilized in the third
quarter. Demand for loans continues to wane, with one quarter of
bankers noting a falloff in demand compared with 17 percent reporting an increase. However, demand for operating and crop storage
loans is stronger than last quarter and much stronger than a year
ago, likely due to robust agricultural production.

0

Farm Lending Trends and Forecasts

–20
–40

What changes occurred in non-real-estate farm loans in the past three months compared
with a year earlier?

–60
–80
–100

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2010

Demand for loans
Availability of funds
Rate of loan repayment
Loan renewals or extensions
Change in collateral required

Rate of Loan Repayment
Loan repayment rates stabilize.
Index

2010:Q3
Index
–7.91
18.53
–2.09
0.74
11.91

Greater
17.19
23.18
10.04
11.81
12.72

Same
57.71
72.16
77.84
77.12
86.46

Less
25.10
4.65
12.13
11.07
0.82

2010:Q2
Index
–11.89
16.60
–15.50
13.60
13.40

100
80

How do you expect the volume of farm loans made by your bank during the next three
months to compare with the volume made during the same months a year ago?

60
40
20
0
–20
–40
–60
–80
–100

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2010

Survey responses are used to calculate an index for each question by subtracting the percentage reporting a decrease from the
percentage reporting an increase. When all respondents report
increased activity, an index will register 100. An index will register
–100 when all respondents report a decrease. An index will be zero
when the number of respondents reporting an increase or decrease
is equal.

Non-real-estate farm loans
Feeder cattle loans
Dairy loans
Crop storage loans
Operating loans
Farm machinery loans
Farm real estate loans

2010:Q3
Index
–0.68
–4.96
–14.58
9.22
10.72
–10.06
–23.29

Greater
14.17
10.76
1.04
16.48
22.88
11.20
5.05

Same
70.98
73.52
83.33
76.25
64.95
67.54
66.60

Less
14.85
15.72
15.63
7.27
12.16
21.26
28.34

2010:Q2
Index
–8.65
–14.90
–14.29
2.33
9.30
–19.22
–21.41

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 Public Affairs Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas,
TX 75265–5906, or by calling 214-922-5254. It is available on the web at
www.dallasfed.org.
For questions regarding information in the release, contact Emily Kerr, 214-922-6941.

Loan-to-Deposit Ratios at Survey Banks
Average desired and actual ratios
Percent
75

Renewals or Extensions of Loans
After rising for two years, requests for renewals or extensions flatten
out in the third quarter.

70

Index

60

100

55

80

50

60

45

40

40

20

35

Desired Ratio

Actual Ratio

65

2009:Q3

0

2010:Q1

2009:Q4

2010:Q3

2010:Q2

–20

Distribution of Loan-to-Deposit Ratios

–40
–60

Banks reporting (percent)

–80
–100

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2009

2010

Amount of Collateral
Thirteen percent of bankers note an uptick in collateral requirements.

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

2010

Oct.1

Jan. 1

Apr. 1

Jul. 1

Oct. 1

25
11
15
20
29

25
9
19
24
23

24
11
13
21
31

22
11
14
23
30

23
10
14
25
29

Index
100

Interest Rates

80
60

Fixed

40

Average rate (percent)

20
0

2009

–20

Oct.1

Jan. 1

Apr. 1

Jul. 1

Oct. 1

6.90
7.18
7.20
6.89

6.86
6.98
7.00
6.75

6.81
7.07
7.15
6.75

6.78
6.89
7.10
6.69

6.83
6.96
7.02
6.71

6.42
6.34
6.20
5.99

6.12
6.46
6.26
6.08

5.91
6.22
6.21
5.94

6.05
6.24
6.29
5.99

5.73
6.11
5.97
5.53

–40
–60
–80
–100

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2010

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

2010

Variable
Anticipated Trend in Farmland Values
For the first time in two years, more bankers expect farmland prices to
increase than decrease over the next three months.
Index
100
80

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

Total Agricultural Loans

60
40

Agricultural loan volumes held steady in the second quarter.

20

Millions of dollars (seasonally adjusted)

0

8,200

–20

7,800

–40

7,400

–60

7,000

–80

6,600

–100

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2010

6,200
5,800
5,400
5,000
4,600
4,200
3,800

2

Ag r i c u lt u r a l S u rv e y

|

2000

Third Quarter 2010

2001

|

2002

2003

2004

2005

2006

2007

2008

2009

Federal Reserve Bank of Dallas

2010

Rural Real Estate Values — September 2010
Cropland—Dryland

Eleventh Federal Reserve District

Average
Banks1
value2
Third quarter 2010

1
3
12
N E W

2

M E X I C O

4

L O U I S I A N A

5

13

6

7

T E X A S

11

8

9

10

1
2
3
4
5
6
7
8
9
10
11
12
13

2005 dollars per acre
90
Irrigated

80
70
60
50
40

Dryland

30
20

Ranchland

10
2001

2002

128

1,344

1.5

4.0

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
Southern New Mexico
Northern Louisiana

114
23
15
9
10
13
9
6
16
5
n.a.
7
5
9

1,343
497
509
666
818
1,258
1,979
2,102
2,727
1,047
n.a.
1,265
418
1,480

1.4
1.0
3.0
6.0
–1.0
–0.4
–0.1
7.2
1.8
–9.7
n.a.
4.5
–0.8
3.4

2.8
3.2
4.2
20.3
–3.6
–7.4
–4.5
21.2
2.1
–24.5
n.a.
20.1
8.4
19.8

97

1,491

0.9

8.5

82
23
15
6
6
6
n.a.
n.a.
9
4
n.a.
8
7
8

1,426
1,188
1,105
1,156
1,167
2,164
n.a.
n.a.
2,726
1,302
n.a.
2,759
1,998
1,852

1.0
2.1
–0.2
6.0
–2.9
–1.9
n.a.
n.a.
2.6
–14.4
n.a.
11.5
–1.1
4.7

10.0
10.5
0.7
16.5
–4.4
–0.8
n.a.
n.a.
–2.7
–14.6
n.a.
31
2.9
7.3

District

139

1,270

–0.1

11.3

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
Southern New Mexico
Northern Louisiana

128
22
12
9
10
15
10
11
18
4
n.a.
15
6
5

1,630
405
382
660
886
1,830
2,206
2,055
3,379
970
n.a.
1,696
240
977

0.2
1.4
0.2
0.2
–1.8
0.8
–1.6
1.3
0.4
–15.7
n.a.
0.6
–6.8
1.8

8.9
4.5
–4.5
14.6
–3.1
–0.5
0.6
7.5
0.3
–16.9
n.a.
12.5
8
2.9

District

Cash rents for ranchland edge up in the third quarter.

2000

District

Cropland—Irrigated

Real Cash Rents

0

Percent change3
in value from
Previous Previous
quarter
year

2003 2004

2005

2006 2007

2008

2009

2010

1
2
3
4
5
6
7
8
9
10
11
12
13

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
Southern New Mexico
Northern Louisiana

Ranchland
Real Land Values
Farmland values rise for dryland and irrigated land.
2005 dollars per acre
1,400

Irrigated

1,200
1,000

Ranchland

800
Dryland

600
400
200
0

2000

2001

2002

2003

2004

2005 2006

2007 2008

2009

2010

1
2
3
4
5
6
7
8
9
10
11
12
13
1

Number of banks reporting land values.
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation.
n.a.—Not published due to insufficient responses but
included in totals for Texas and district.
2

Ag r i c u lt u r a l S u rv e y

|

Third Quarter 2010

|

Federal Reserve Bank of Dallas

3

Quarterly Comments
District bankers were asked for additional comments concerning agricultural land values and credit conditions.
These comments have been edited.

Region 1—Northern High Plains
Yields and prices look very good
for our farm borrowers. Most of them
should have an excellent year. Cattle
profits have improved as cattle coming
out of the feed yard are now making
$50 to $100 per head.
The corn harvest is just under way.
Early yield reports are above average.
The moisture profile for wheat sowing is good. Cattle feeders are anxious
about the impact of higher corn prices.
Due to increases in commodity
prices, I anticipate an upward spike in
land values.
We have experienced an increase in
loan demand for equipment as farmers
anticipate higher than average prices
and yields.
Operating expenses were up slightly
more than expected mainly due to increased fertilizer and irrigation costs.
Cotton is starting to pop open, and
some dryland will be sprayed and possibly harvested by the first of October.
Most of the Conservation Reserve
Program acres in the county came out
of the program for a year and became
available for grazing or farming, which
could be affecting our cash rent prices.

Region 2—Southern High Plains
If the weather cooperates, we could
have a banner year for cotton. The
price looks good going into harvest.
We anticipate land values will go up
with a good production year.
The cotton crop is looking average to excellent in the surrounding
areas. Above-normal rainfalls in early
July helped the majority of the crops,
but they did hurt some areas prone to
flooding. Some leaching of fertilizer
occurred in certain areas, ultimately
affecting possible yields. Weather permitting, cotton production in the High
Plains should be better than average.
High prices are in favor of the producers as well.

4

Ag r i c u lt u r a l S u rv e y

Region 3—Northern Low Plains
We have prospects of a good cotton
crop with better-than-average prices.
Summer rains have helped pastures
grow a lot of grass, and overall cattle
prices remain strong. Reports show
ranchers are not keeping many heifers,
which should keep the cow-calf operation good for another three years.
Excellent crop prices for cotton and
cattle will make 2010 a good year for
agricultural producers in Hall County.
Field work is slowing as harvest
equipment repairs are being made.
Producers ponder if calves should be
sold now, given strong livestock prices.
Many producers are hoping to reduce
debt going into 2011.
Land prices are holding firm, but
few properties are selling. There are
very few metroplex buyers right now,
and land is too expensive for farmers
and ranchers to purchase.

Region 5—Cross Timbers
Recent rains from a tropical storm
have helped tremendously. Adequateto-good hay and silage crops have
been made this year. Dairies are still
not able to do much catching up from
their losses in 2009 and early 2010.
Beef cattle producers are still getting
good prices for calves, although prices
have been lower in recent weeks.
There have not been a lot of land sales
in this area in recent months.
It has been a very dry July and
August. However, we recently received
two inches of rain in one day from a
Gulf disturbance.

Region 6—North Central Texas
Agricultural land values have remained stable. Here in the Hill Country,
we have a lot of weekend farmers from
the Dallas–Fort Worth metroplex. This is
a good thing because we would rather
have several smaller loans than one
large one.

Region 8—Central Texas

Storms are producing a lot of rain
for the area. We should have a good
fall after this rain. Oil and gas leasing
and income are still the major driving
force behind the area economy. Rural
farm and ranch sales are very limited.
Listings are way down as landowners
wait out oil- and gas-related activity.
Various real estate tracts in the surrounding areas and in the Eagle Ford
Shale deposits are receiving leases
from oil and gas companies in excess
of $1,500 per acre and up to $4,000
per acre. This in turn has increased the
asking price on much of the farm and
ranch land to highs exceeding their value. Because of this, very little property
is being purchased. The primary areas
are in North Bee, Kennedy, Jim Wells,
Live Oak and Goliad Counties.
Cattle numbers are down. The trend
is toward reduced stocking rates to
help manage input costs. Beneficial
rains of three to six inches will set the
stage for planting winter pasture.

Region 9—Coastal Texas
Agriculture loan repayments are
up due to good production yields and
prices.
Summer rains were very beneficial,
and grazing conditions should be good
until the first frost.

Region 11—Trans-Pecos and Edwards
Plateau
Land values vary greatly in our area
depending on the water usage permitted by the Edwards Aquifer Authority
for the tract of land.
The Edwards Plateau has, for
the most part, enjoyed timely rains
throughout the spring and summer.
Range conditions are above normal,
and livestock have enjoyed ample feed
and are in good shape. Livestock prices
across the board are excellent. Land
sales have slowed and prices in some
instances may have softened just a bit,
but overall they have not changed significantly. Recreational tracts are still
popular and command strong prices.

A lot of hay has been made in 2010.
We are set with good moisture for a
winter forage crop. Favorable weather
patterns continue to bless the Coastal
Bend.

|

Third Quarter 2010

|

Federal Reserve Bank of Dallas