Agricultural Survey

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

• We are experiencing the driest two-year period since the ’50s. For the first time in my life, we have seen native grass pastures blowing. Another wave of cows will likely be liquidated soon. The moisture profile will need to be built up significantly before summer crops are planted. Inflationary pressures are causing operating lines to be much higher this renewal season.
• Conditions remain extremely dry. Winds have further hampered, and been frustrating to, the startup of the farming season. Wheat pasture grazing of cattle was poor, and prospects of summer grass grazing look bleak. Surprisingly with these conditions, farmland and ranchland prices continue to rise, with demand outstripping the limited supply of land available for purchase.
• The persistent drought has been devastating on the farmers and ranchers in our area. Many have sold off calf crops earlier than normal, and some have sold mature cows due to the lack of pasture and hay. This has been seen on a broader scale around the region also. The dryland winter wheat crop looks poor, with many acres being lost. Irrigated wheat acres are likely to be grazed-out; however, there's not many irrigated acres to begin with. The fall crop planting season is about to get started in coming months. Many irrigated farmers have begun prewatering; however, this will limit profitability. Commodity prices have seen some pullback recently, but they are still favorable if yields are high and input costs are managed. The drought insurance from the federal programs has been a nice boost for many livestock producers in the area, but moisture is badly needed. On the banking side, managing interest rate risk and profitability have come center stage with the rising interest rates on deposits.

Region 2—Southern High Plains

• Concern has increased with cotton producers due to the rise in input costs and interest rates, plus continued downward-to-modest movement in the current cotton price.

Region 3—Northern Low Plains

• The area is still experiencing drought conditions. Producers are preparing land for planting. Native pasture conditions are still considered poor, with limited wheat pasture grazing available. The prospects of many dryland acres making it to harvest are slim in this area. Farm cash-flow projections are tight this year with higher interest rates and little relief on input costs.

Region 6—North Central Texas

• Calf prices have increased in the past three months. Input costs have also increased. Hay prices remain elevated with diminished inventories.

Region 7—East Texas

• Dryland farming and stocker cattle are showing interest.

Region 11—Trans-Pecos and Edwards Plateau

• Dry conditions have required many producers to increase feeding more than in normal years. Ag loans continue to perform satisfactorily as a result of good market prices for sheep and goats and reasonable prices in the cattle market. The inflated expenses that producers are experiencing will have an adverse effect on many producers, especially those with minimal or no income outside of their ag operation. Government programs provide a lifeline in these situations.

Historical Data

Historical data can be downloaded dating back to first quarter 2000.

• Land Values
• Cash Rents
• Farm Lending Indexes
• Loan Volume Indexes by Loan Type
• Anticipated Farmland Values and Credit Standards
• Interest Rates by Loan Type

Figures

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

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

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

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

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