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Third Quarter 2016

DALLASFED

Agricultural
Survey

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

Survey
Highlights

ankers responding to the thirdquarter survey continued to report
concern for producers’ financial positions due to low commodity prices.
Low prices for crops and livestock were the
chief concerns among bankers. Farmland
conditions varied by region, with most in
good shape due to summer rains but some
suffered from excessive rain.
Demand for agricultural loans decreased
for a fourth consecutive quarter. Loan renewals and extensions continued to increase as
loan repayment rates continued to decline.
Overall, the volume of non-real-estate farm
loans was lower than a year ago. Operating
loans continued to increase year over year;
all other loan categories fell in volume year
over year in the third quarter (Figure 1).
District land values increased in the
third quarter. Real irrigated land values rose
the most, up 7.2 percent over the previous
quarter. Real ranchland values were up 6.5
percent, and real dryland values were up 5.6
percent (Figure 2). According to bankers who
responded both in third quarter 2016 and in
third quarter 2015, ranchland and dryland
values increased year over year, while irrigated land values were mostly unchanged
from a year ago (Table 1).
The anticipated trend in the farmland
values index remained negative for a fifth
consecutive quarter, suggesting respondents
expect farmland values to trend down in the
upcoming months. Comments from bankers
point to poor crop production, low commodity prices and concern about the economy as
causing slowing land sales and depressing
values. The credit standards index indicated
continued tightening of standards (Figure 4).
What’s New This Quarter:
The Agricultural Survey’s online presence takes
on a new look. Check it out at www.dallasfed.org/
research/agsurvey.

Figure 1

Farm Lending Trends
What changes occurred in non-real-estate farm loans at your bank in the past three months
compared with a year earlier?
Index

Percent reporting, Q3

2016:Q2

2016:Q3

pGreater

Same

qLess

–3.9

–10.9

13.6

61.9

24.5

3.4

1.4

9.2

83.0

7.8

–28.2

–25.2

3.2

68.5

28.4

25.0

22.8

26.0

70.9

3.2

Demand for loans*
Availability of funds*
Rate of loan repayment
Loan renewals or extensions
Index

Availability of funds*

50
40

Loan renewals
or extensions

30
Rate of loan repayment

20
10
0
–10
–20
–30

Demand for loans*

–40
–50

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

What changes occurred in the volume of farm loans made by your bank in the past three months
compared with a year earlier?
Index

Percent reporting, Q3

2016:Q2

2016:Q3

pGreater

Same

qLess

–8.1

–2.4

17.6

62.4

20.0

Feeder cattle loans*

–31.1

–23.6

4.1

68.2

27.7

Dairy loans*

–11.6

–14.2

1.6

82.6

15.8

Crop storage loans*

–14.3

–4.6

5.6

84.2

10.2

5.7

8.8

22.4

64.0

13.6

Farm machinery loans*

–24.3

–24.8

5.5

64.2

30.3

Farm real estate loans*

–24.2

–27.0

6.3

60.4

33.3

Non-real-estate farm loans

Operating loans

*Seasonally adjusted.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

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

Region 1 • Northern High Plains

Region 6 • North Central Texas

XX2016 is shaping up to be financially challenging

XXHistorically poor crop production due to rain or

XXCorn, milo and cotton all look near record-yield

XXThis year is extremely poor with all commodity

for ag producers. Low grain and cattle prices will
place many producers in a position of large equity
losses and partial fixed asset liquidation to remain
in business.

potential. Cattle performed well this summer, both
on pasture and in the feedlot. Unfortunately, none of
these things matter much with commodity prices at
their current levels. 2016 will be very tough for ag
borrowers. The outlook for 2017 is even worse.

XXCrop conditions look good with some hail dam-

age in locations. Cattle losses are noted for stocker
operations.

Region 2 • Southern High Plains

XXRecent rains have helped the peanuts and milo;

cotton needs some heat units now. We need a farm
bill to help our cotton farmers. Hopefully, current
crop prices will hold or improve. Rangeland is in
good shape, with cattle not needing extra feed.

XXLubbock-area land values are higher than most

areas due to sellers speculating on commercial or
residential development. Ranchland is higher due to
recreational values rather than livestock production.

Region 4 • Southern Low Plains

XXThe cotton crop is late, and we expect a below

average to average crop. September rains were
too late to help crop yields. Wheat is being planted.
Cattle margins continue to get tighter. Producers
are very hesitant to purchase cattle even though
pasture is in good shape. Many producers are
concerned about the survival of their operation if
prices continue to stay down.

Region 5 • Cross Timbers

XXMost of our area is in good shape for mois-

ture. We have a surplus of hay, and late moisture
enabled another cutting. It also set up a good situation for getting winter wheat and oats planted. On
the negative side, cow-calf operators are being hit
hard by lower calf prices. Those who sell hay are
not able to move much, and prices are down significantly for round bales. There has not been much
change in farm, ranch or recreational real estate
sales or prices in our area in the past months.

drought plus poor current crop prices are beginning
to undermine demand for purchasing farmland in
this area, resulting in a slow spiral downward in
land values.
prices lower and most yields on corn, wheat, grain
sorghum and cotton down by 15 to 50 percent. Excess rain two years in a row has caused significant
losses in equity. Cattle prices are not high enough
this year to offer much help either. Two weeks of
cool rain in August caused cotton seed to sprout
in the boll on thousands of acres of cotton. This
lowers price and quality, and the farmer loses the
income from the cotton seed.

XXThe steady moisture this summer has been
beneficial for both farmers and cattlemen.

XXConditions remain reasonably stable with lower

cattle prices having some negative effects. Lower
commodity prices are also a negative factor.
However, the positive real estate market due to
our proximity to the DFW metroplex overrides the
dampening effects of cattle and commodity prices.

Region 7 • East Texas

XXRequests for all types of ag loans have been very
slow. Cattle loans are expected to increase in the
fall. Crop loans are expected to pay in full, although
insurance proceeds may be needed to complete
the payoffs.

Region 8 • Central Texas

XXAugust rainfall was excellent, causing nice

grazing going into the fall/winter. Calf weights are
heavy, but prices are down in almost all categories.
Land sales have slowed due to concerns about
the economy and loss of jobs. Drilling in the Eagle
Ford is sparse at best. Local economy has changed
significantly with the drop in oil and gas activities.

XXCorn harvest is complete with good yields. How-

ever, prices continue to fall, same with cattle prices.
This has been the best August that anyone can
remember for a long time, with ample grass and
water and fat cattle. If the weather keeps up, some
producers will not plant fall grains and make use
of the grass that is available into the first freeze.
Pecan harvest looks to be fair this year.

XXRecord rainfall resulted in abundant grass and

stock tank water. Farmers are sowing wheat, and
everything looks good except cattle and grain
prices.
Agricultural Survey • Third Quarter 2016 • Federal Reserve Bank of Dallas

12
N E W

M E X I C O

Regions of the Eleventh
Federal Reserve District

Region 9 • Coastal Texas

XXCrops have been harvested, with average to

above average yields and average price. The cotton
crop had excessive rain during the later harvest
and lost some production on the fields at about 10
to 30 percent. Most grains were harvested prior to
heavy rains, but some extreme weather right before
harvest affected stands. Grain yields averaged 30
to over 50 hundredweight. Cattle have had good
pasture through the majority of the year with drier
times in summer that have been corrected with
recent rains. Most rebuilding of herds has occurred
with some still to be completed once prices have
stabilized. Calf prices are dropping from record
amounts in the past 18 months.

XXDue to weather-related issues and low commodity prices, we are expecting some producers to fall
short of paying off operating lines for 2016. There
is an increased concern for the upcoming crop year
with overall low commodity prices and possibly
higher debt carry by producers.

Region 11 • Trans-Pecos and
Edwards Plateau

XXMost of the pasture land received good rainfall
during the growing season, resulting in adequate
forage for livestock.

XXRains all summer have been beneficial for rangeland, but have negatively impacted hay quality and
demand. Continued low cattle prices and adequate
forage have caused many producers to retain
calves, resulting in increased requests for renewals.

XXOur West Texas economy is depressed by the

downturn in the oil and gas industry coupled with
decreased livestock prices. Range conditions are
actually good overall with excellent August rains.
Land values are down slightly, but there is sales
activity.

Table 1

Rural Real Estate Values—Third Quarter 2016

Banks1

Average
value2

Percent change
in value from
previous year3

Cropland—Dryland
District*

L O U I S I A N A

5
6

T E X A S

105

1,900

6.1

Texas*
1 Northern High Plains

95
14

1,943
855

6.7
3.7

2 Southern High Plains

696

–1.6

3 Northern Low Plains*

767

–3.6

4 Southern Low Plains*

1,268

3.4

5 Cross Timbers

1,425

0.0

2,807

10.4

7 East Texas*

2,548

0.0

8 Central Texas

4,192

16.5

9 Coastal Texas

3,350

11.6

6 North Central Texas

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

n.a.

2,005

10.5

3
7

300
2,236

0.0
–5.2

Cropland—Irrigated

XXLivestock prices have softened in the past quarter, particularly cattle prices. Range conditions are
excellent due to recent rains on top of a very good
spring. From the producer’s standpoint, things are
not bad in the Edwards Plateau.

XXDownward trend on cattle market prices has

decreased interest in continued restocking in spite
of excellent pasture conditions from recent rains.
Meat goat and hair sheep interest is good, even
with prices pulling back some from highs. Pastures’
carrying capacity at present well exceeds stocking
rates. Livestock is in very good condition. Hunting
income remains relatively stable and very important
to most operations, with minimal reported hunting
leases being given up.

XXHot weather is becoming a concern as grasses

from spring rains dry out and the fire hazard increases. We need fall rains to help bring back water
tables. Cattle prices have stabilized, helping local
ranchers and farmers.

District*

2,530

0.5

Texas*
1 Northern High Plains

2,241

1.1

1,986

2.9

2 Southern High Plains

1,660

–5.8

3 Northern Low Plains*

1,665

6.5

4 Southern Low Plains

1,640

7.9

n.a.

6 North Central Texas

2,838

31.3

7 East Texas

2,840

0.0

8 Central Texas

3,733

3.7

9 Coastal Texas

4,450

6.1

10 South Texas

2,917

0.0

11 Trans-Pecos and Edwards Plateau

3,107

11.9

12 Southern New Mexico

4,450

3.8

13 Northern Louisiana

3,371

–8.5

109
99

1,753
2,078

5.1
5.3

5 Cross Timbers

Ranchland
District*

Region 12 • Southern New Mexico

Texas*
1 Northern High Plains

608

–3.7

XXFluctuating commodity prices continue to present

2 Southern High Plains

681

–1.3

3 Northern Low Plains

807

–2.7

4 Southern Low Plains*

1,094

15.2

5 Cross Timbers
6 North Central Texas

4
15

1,525
2,807

0.0
9.4

7 East Texas

2,675

4.8

8 Central Texas

5,192

19.2
15.7

challenges.

9 Coastal Texas
10 South Texas
11 Trans-Pecos and Edwards Plateau

2,720

n.a.

1,844

–1.6

12 Southern New Mexico

350

0.0

13 Northern Louisiana

2,064

8.3

*Seasonally adjusted.
1
Number of banks reporting land values.
2
Prices are dollars per acre, not adjusted for inflation.
3
Not adjusted for inflation and calculated using responses only from those banks reporting in
both the past and current quarter.
n.a.—Not published due to insufficient responses but included in totals for Texas and district.

Agricultural Survey • Third Quarter 2016 • Federal Reserve Bank of Dallas

Figure 2

Figure 3

Real Land Values

Real Cash Rents

2015 dollars per acre
2,600
2,400

2015 dollars per acre per year
Irrigated

2,200
2,000
1,800

140

Irrigated

120

100

Ranchland

1,600
1,400
1,200
1,000
800
600
400
200
0

2015 dollars per acre per year

Dryland

60
20

Ranchland

10
0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NOTE: All values have been seasonally adjusted.

Table 2

Figure 4
Anticipated Farmland Values and Credit Standards

Interest Rates by Loan Type
Long-term farm real estate

Intermediate term

Other farm operating

Feeder cattle

What trend in farmland values do you expect in your area in the next three months?

Fixed (average rate, percent)

Index
Anticipated trend in farmland
values*

Percent reporting, Q3

2016:Q2

2016:Q3

pUp

Stable

qDown

–5.7

–14.5

2.5

80.5

17.0

What change occurred in credit standards for agricultural loans at your bank in the past three months
compared with a year earlier?†
Credit standards

2016:Q2

2016:Q3

pTightened

Same

qLoosened

18.4

27.2

72.8

0.0

Index
50

2015:Q3

6.03

6.16

6.05

5.79

6.04

6.08

5.93

5.67

2016:Q1

6.07

6.11

6.09

5.81

6.08

6.19

6.07

5.82

5.98

6.07

5.96

5.72

40
30
Credit standards †

0
–10

Anticipated trend
in farmland values*

–20

Variable (average rate, percent)
2015:Q3

5.65

5.70

5.63

5.36

5.70

5.73

5.69

5.31

2016:Q1

5.72

5.74

5.78

5.38

5.73

5.80

5.68

5.32

5.60

5.63

5.64

5.36

DALLASFED

–30
–40
–50

2011

2012

2013

2014

2015

2016

*Seasonally adjusted.
†Added to survey in second quarter 2011.
NOTE: Survey responses are used to calculate an index for each item by subtracting the percentage of
bankers reporting less from the percentage reporting greater. Positive index readings generally indicate an
increase, while negative index readings generally indicate a decrease.

Agricultural Survey
is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally
adjusted as necessary. Data were collected Sept. 6–14, and 132 bankers responded to the survey.
This publication is prepared by the Federal Reserve Bank of Dallas and is available without charge by
sending an email to pubsorder@dal.frb.org or by calling 214-922-5270. It is available on the web at
www.dallasfed.org/research/agsurvey.
For questions, contact Amy Jordan, 214–922–5178.
Agricultural Survey • Third Quarter 2016 • Federal Reserve Bank of Dallas

Full text of Agricultural Survey : Third Quarter 2016

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