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Quarterly Survey of Agricultural Credit Conditions in the Eleventh Federal Reserve District
Fourth Quarter 2009
Federal Reserve Bank of Dallas
The fourth quarter survey showed budding optimism in the Eleventh District agricultural community. Respondents noted recent rains improved conditions for crops and livestock grazing and boosted the crop outlook for 2010. Still, residual effects of the drought remain. Supplemental feeding continued in some parts of the district, and a few bankers reported that agricultural producers in their area suffered financial losses.
On the heels of improved farming and ranching conditions, credit conditions stabilized in the fourth quarter. Seventy-three percent of respondents indicated steady rates for both loan repayment and renewals. Fifty-seven percent of responding bankers noted stable loan demand, up from 48 percent in the third quarter. The outlook improved as well. A significantly higher share of bankers compared with last quarter expects no change in the volume of feeder cattle, crop storage, machinery and farm real estate loans over the next three months.
Farmland continued to be sold for recreational purposes, and prices weakened further. Dryland values edged down 2 percent, while irrigated and ranchland values fell 1 percent in the fourth quarter. The expected trend in farmland values also remained negative, with 21 percent of respondents anticipating lower prices and only 3 percent expecting increases three months from now.
11th District Agricultural Land Values
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
Adequate rainfall in the fall provided a good start for the winter wheat crop.
Overall, most sectors of the farm economy were profitable in 2009 with the exception of cattle feeding and dairy. Crop prices have stabilized to profitable levels; inputs are reasonable, and most areas received enough moisture to make a crop. Cattle feeding experienced a loss in 2009 with continued strain on both stocker and cow–calf producers. The dairy sector was a disaster in 2009, but there may be positive signs going into 2010. The overall weak U.S. economy will continue to negatively affect the cattle and dairy markets. The outlook for crop producers going into 2010 looks favorable with decent moisture now and prospects for good spring moisture on the horizon. We are all glad 2009 is behind us.
Region 2—Southern High Plains
Recent sales of ranchland for recreational purposes have been significantly higher than last quarter.
Region 3—Northern Low Plains
Farmers have completed harvesting 2009 crops. Field work has been recently hampered by the snow and cold weather. Cattle producers are supplemental-feeding cow herds and wheat pasture cattle. Fall cattle price reductions caused more producers to keep calves. We should see increased sales with better weather.
Region 4—Southern Low Plains
Current drought conditions, along with low wheat futures prices, have limited farmers’ and ranchers’ potential income from crops and cattle.
Region 5—Cross Timbers
We had good moisture conditions this fall and winter. Dairy operations are starting to improve due to increasing milk prices, but they are still not good.
The wheat crop is up, but we have limited grazing because of all the moisture.
Region 6—North Central Texas
We have gone from one extreme to the other. Wet conditions are hindering the completion of the harvest as well as cattle feeding.
Region 8—Central Texas
There have been little or no land sales in the last three months due to few listings and even fewer buyers. Hay is still in demand. The late rain has made winter grazing (oats and rye) the best it has been in years.
The drought hurt all cattlemen and dryland farmers. 2008 and 2009 disaster payments are keeping some ranchers in business. Crop insurance payments are saving farmers from large loan carryovers. Hay is in short supply. Cattle feed prices are high.
Producers are still trying to overcome the extended drought conditions of 2008–2009. Cattle numbers are down 30 percent or so in our county. There were not that many buyers of “recreational ranches” in 2009.
Region 9—Coastal Texas
Recent rains have improved both borrowers’ and lenders’ sentiments. We may have a real crop this year.
Region 11—Trans-Pecos and Edwards Plateau
Producers are concerned over how proposed regulations will affect both their productivity and operating costs. Livestock producers are already faced with competition from subsidized ethanol plants for corn feed for their livestock and a shaky economy. Many producers who are considering expanding can’t do so due to land sales going to recreational groups at prices that are too high for the land’s productive capability. However, many area producers have maintained a good capital position in their operations, which has left them in a good position to weather the economic storm.
This winter has started out wetter and cooler than normal. Range conditions are generally good; prices for livestock are a little soft but remain okay. Today’s rancher faces a difficult road. Costs are up. Family ranches are being fragmented into small recreational tracts, resulting in less predator control. Regulation and credit conditions are making it more difficult for the rancher to obtain financing. This makes ranching a difficult profession, and even more difficult to turn a profit. The lifestyle and tradition are what keep most ranchers going.
Land conditions were dry, but snowfall provided the area with much needed moisture for the winter crops. Sales have been flat for feeder cattle, sheep and goats in the area, given the amount of winter weight gain.
| 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 telephoning
(214) 922-5254.
For questions regarding
information in the release, contact Laila
Assanie, (214) 922-5191. |
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