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.

• Agricultural profitability in 2023 will vary greatly among producers. Yields were much more dependent upon weather. More specifically, those that did not receive hail damage yielded pretty well. Prices received also are widely spread. Those that marketed portions of their crops early were the clear winners. Those that simply sold across the scale left quite a bit of money on the table. Wheat pasture potential is the best it has been in years, but we need another good rain to get the dryland tied down. Salvage prices on cull cows is high enough to keep aggressive culling in play this fall, and we are not seeing any real heifer retention yet, so it doesn’t look like we will be rebuilding the depleted cow herd in our area.
• There are dry conditions presently, and we are in need of rain. Wheat planting conditions were above average at the time of planting.
• The importance of crop insurance cannot be overstated. Without both multi-peril insurance and the stacked income protection plan (STAX), many farmers would not be able to pay operating loans in full. Prices have definitely not stayed up with input cost.
• Dry conditions have limited irrigated wheat pasture. We have very little dryland wheat pasture or volunteer wheat. Our area needs winter moisture to start building a profile for next spring’s crops. 

• All crops are great disappointments after we had good moisture and prospects up to early August. After extreme heat, winds and a lack of rain during the months of June and July, dryland crops completely shut down and irrigated crops were greatly affected. It appears at this time dryland crops will be at 20 percent of normal production and irrigated crops will be at 55 percent of normal. Crop insurance and STAX government payments will be a major factor in repaying farm loans again this year.
• Another crop failure this cycle for our county. Crop insurance was down and inputs through planting increased. After insurance proceeds, most producers were at breakeven or lost $10-$20 per acre.

• Harvest is 90 percent complete. Crop yields were considerably lower than normal due to drought and excessive heat throughout the summer. Winter grazing and cover crops are in need of moisture soon to survive. The 2023 crop year has been a year of high input and supply costs and limited income due to lower prices and lower yields. The cow-calf producer is the only one seeming to do well because of the unprecedented high prices for calves.

• The drought conditions of late have played a significant role in the decline of production across all commodities in our region. This coupled with the declining export caused by the strength of the U.S. dollar and Brazil’s increased crop yields of late have caused the commodity market to take a hit as well. We are hoping to be entering into an EL Niño weather pattern soon as many weather experts believe, which will help our commodity yields in this region. The cattle market has continued to show strength, and so our customers have been diversifying into cattle which has improved their cash flow.

• Some interest rate reductions would be really good; our cost of funds is starting to hurt.
• There have not been many real estate transactions lately.

• Most ag real estate sales are for recreational purposes, with sales prices remaining stable. Some moisture has been received, though grass is dry and short for the most part. Beneficial weed growth has been good as a result of the moisture. Calf, lamb and kid goat prices remain very good, especially considering the recent dry conditions that occurred earlier in the year. Decisions on retaining breeding livestock remain in play. Hunting income remains very important to most ranchers.

• We’ve had very dry climate conditions. We need winter moisture in order to jump-start spring ground moisture levels. Commodity input prices have moderated some but continue to squeeze margins. Cattle prices have come off since late summer and early fall. Forward contracted calves did well; non-contracted felt the impact. The dairy industry continues to struggle with higher break-even levels because of elevated commodity prices. There were multiple dairy liquidations in 2023, and we anticipate more in 2024.

• Cost of funds is 2.35 percent, cost of interest-bearing funds is 3.66 percent, cost of deposits is 2.36 percent (excludes borrowings).

Charts

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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