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Agricultural Survey

Third Quarter 2017
Third Quarter 2017

What's New This Quarter

This quarter’s survey data include seasonal factor revisions. The Federal Reserve Bank of Dallas revises the historical data for the Agricultural Survey after calculating new seasonal adjustment factors. Seasonal revisions result in slight changes in the seasonally adjusted series. Bankers were also asked additional questions about commodities grown and the impact of changing energy prices in their regions; aggregate responses are presented in a special report. Read the Special Report.

Survey Highlights

Bankers responding to the third-quarter survey noted moisture conditions are generally good, but flooding in a couple regions caused losses of crops and cattle. Crop yields are expected to be above average. Respondents noted that livestock prices generally remained good.

Demand for agricultural loans overall decreased for the eighth consecutive quarter. Loan renewals and extensions continued to increase. The rate of loan repayment declined slightly after stabilizing last quarter. Overall, the volume of non-real-estate farm loans was lower than a year ago, as was the volume of farm real estate loans. The volume of operating loans increased; all other loan categories’ volumes fell year-over-year this quarter (Figure 1).

District real ranchland and dryland values decreased this quarter, while irrigated cropland values increased (Figure 2). According to bankers who responded in both this quarter and third quarter 2016, nominal district cropland values increased year over year while ranchland values held steady (Table 1).

The anticipated trend in the farmland values index remained positive for a second consecutive quarter, suggesting respondents expect farmland values to trend up in the upcoming months. The credit standards index indicated continued tightening of standards on net (Figure 4).

Agricultural Survey is compiled from a survey of Eleventh District agricultural bankers, and data have been seasonally adjusted as necessary. Data were collected September 5–13, and 133 bankers responded to the survey.

Quarterly Comments

Regions of the Eleventh
Federal Reserve District

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

  • The recent rains we experienced in August helped our farmers cut back their expenses. We need some good heat units for the cotton we have as the rain showers were good but did cool us off tremendously.
  • Late summer rainfall has significantly improved our moisture conditions, improving anticipated fall crop yields with lower irrigation expense. Soil moisture is excellent for planting wheat. Grain sorghum and cotton yields are still very dependent upon a normal to later than normal freeze date.

Region 2—Southern High Plains

  • We need rain and a late freeze. Most crops are looking good, and we expect production to be above average for 2017. Ranchland is good; cotton and peanuts are holding up well but moisture would help.
  • Irrigated cotton crops are excellent, while dryland cotton crops are very good but late and catching up with heat and open weather. Grain crops are good but there is some insect pressure.
  • We have had the second largest rainfall totals for the summer months in 2017. Although most crops were later going in, they have made good progress, and for producers who have a crop, the prospects look good. We still need a good, dry fall. There are still some areas where the crops didn’t make it, and those will be problem areas.
  • It was difficult to get crops started in our area due to hail, wind and drought, which caused expenses to run somewhat higher than normal.
  • Crops in West Texas are looking very promising. Very beneficial rainfall has been received throughout much of the month of August, which is helping finish things up. Most of the cotton is later than desired, though, so we really need a warm, open September and October. It will take every bushel and pound to clear expenses.

Region 3—Northern Low Plains

  • Irrigated cotton looks good. Fifty percent of dryland cotton has already been destroyed. The remaining dryland will need a warm fall to finish. Pasture conditions are dry to average. Wheat ground is being prepared but it is too dry to plant. Our area needs a rain.

Region 5—Cross Timbers

  • It has turned dry in recent weeks, but overall has been a fairly good-weather year in most of our area. Good hay production has led to a big surplus after a sizeable amount was carried over from last year. Local pecan growers should have a big crop this year with what looks to be good prices at this point. Dairies have a good supply of roughage at low cost and fair milk prices. Beef cattle prices seem to have stabilized, and grazing conditions have been good.

Region 6—North Central Texas

  • Loan demand has weakened.
  • Central Texas is experiencing so much growth that land prices will continue to escalate, shrinking the tillable acres.
  • Rain three weeks ago ruined a lot of hay, but hopefully it hasn’t ruined the soybeans.
  • The cattle market is better, and summer rains have been timely. Hay is plentiful.
  • Our area received unusual rainfall amounts in July and August. Wheat crop yields were fairly normal. However, corn and soybean yields are proving to be well above normal. Cotton yields are projected to be well above normal as well. These yields will be a plus for the farm economy all around our area.

Region 8—Central Texas

  • Rural land prices have softened in the past few months, especially for the larger tracts and the less desirable land tracts—those with no improvements or recreational use. More qualified borrowers are starting to become more rate sensitive and looking for the best rates available before making credit decisions. Demand for feeder loans has been steady, with no big increases noted at this time— we are waiting on the calf market to stabilize and hedging to become a viable option again. Recent rains will help area farmers and ranchers for the next few months, as fall planting will start soon.
  • Flooding on the Colorado caused loss of cattle for some. Most had moved livestock to higher ground. On the beneficial side, there will be a lot of grass going into fall.

Region 9—Coastal Texas

  • Real estate values are driven by recreational users.
  • Overall current conditions in the area vary from being dry in the western areas to adequate moisture along the eastern fringe. The majority of the damage [from Hurricane Harvey] was to the northern counties that had sizable amounts of cotton damages that had been harvested or in the field. Several ag-business facilities also had damages. Cattle feeding has increased in the last 60 to 90 days with the dry time from June to August. The sale of cattle has recently ramped up. Prices have held steady. Current sales have included a higher number of cows, with some larger ranches starting to use their reserve pastures. Hay purchases have increased. Inputs have also remained fairly stable, with margins being at lower levels when compared to 2014–16. All grain and corn have been harvested, with yields being at average levels compared to the last two years. The crops were marketed this year in a different fashion with an ample amount going straight to the Port, where producers were able to obtain a better basis than at the local co-ops. Cotton was well over 90 percent harvested, with the northern counties having some still in the fields. Prices lost some core value prior to Hurricane Harvey and gained on price with the damage to cotton further up the coast. At this time, the prices and quality of the cotton are still good with overall yield above average. The crop will be ginned later than average due to the larger amount of cotton produced. Most producers are looking at keeping a traditional mix of plantings for the 2018 crop year and awaiting the overall production on various areas across the country.
  • Hurricane Harvey and floodwaters from the Brazos and Colorado Rivers damaged a significant portion of the cotton acreage. The range of damage was lower yields/quality degrades to complete losses. All other crops were harvested prior to the storm.
  • The few agriculture loans that we had have recently been sold for non-agricultural use.

Region 11—Trans-Pecos and Edwards Plateau

  • Pasture conditions range from fair to excellent depending on location. The end of the growing season is near, so additional rainfall would greatly improve grass quality going into winter.
  • Livestock prices are steady. Some areas are in good shape with ample rains going into fall, but other areas are extremely dry. Land sales for larger tracts are slow.
  • Livestock prices rebounded somewhat from their lows earlier in the year. Range conditions are still above average even though rain has been very spotty. Some areas received excellent rainfall, and hay crops have been better this year. Feed prices remain high, and the predator issue is still high on sheep and goat operators’ lists of obstacles to overcome. As is always the case, rainfall—or lack thereof—will dictate how 2017 winds up on the Edwards Plateau.
  • Pasture grass coverage and volume is as good as it’s ever been, though we need some moisture. Livestock is mostly in very good condition. Predators are still a real problem, particularly in sheep and goats. Hunting revenues remain a key revenue source for most ranching operations and leasing appears to be stable. Livestock prices remain good overall, though there was some recent weakness in sheep and goat markets.

Region 12—Southern New Mexico

  • Better than average rainfall in late summer has been great for cattle and dryland farm operations.
  • The monsoon was slow to start and pretty spotty, but has finally kicked in and most areas have had good moisture. Feed commodities remain depressed, primarily driven by dairy producers. The vertical integration of dairies to grow substantial amounts of their own feed input has placed significant stress on non-dairy, forage crop producers.



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
  2017:Q2 2017:Q3 Greater Same Less
Demand for loans* -4.6 -11.1 9.6 69.7 20.7
Availability of funds* 7.0 8.3 11.5 85.3 3.2
Rate of loan repayment -0.8 -3.9 5.4 85.3 9.3
Loan renewals or extensions 3.9 7.0 10.1 86.8 3.1

Farm Lending Trends

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
  2017:Q2 2017:Q3 Greater Same Less
Non-real-estate farm loans -7.8 -9.3 8.5 73.6 17.8
Feeder cattle loans* -9.2 -8.7 7.0 77.3 15.7
Dairy loans* -9.1 -7.3 7.0 78.7 14.3
Crop storage loans* -3.3 -8.5 3.3 84.9 11.8
Operating loans 4.8 3.8 15.4 73.1 11.5
Farm machinery loans* -17.8 -13.1 6.6 73.7 19.7
Farm real estate loans* -8.9 -10.3 8.6 72.5 18.9
*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.

Figure 2
Real Land Values

Real Land Values

NOTE: All values have been seasonally adjusted. Real values are created by deflating the nominal values using the implicit price deflator for U.S. gross domestic product.
Figure 3
Real Cash Rents

Real Cash Rents

NOTE: All values have been seasonally adjusted. Real values are created by deflating the nominal values using the implicit price deflator for U.S. gross domestic product.
Figure 4
Anticipated Farmland Values and Credit Standards
What trend in farmland values do you expect in your area in the next three months?
  Index Percent reporting, Q3
Anticipated trend in farmland values* 2017:Q2 2017:Q3 Up Stable Down
7.0 5.3 10.0 85.3 4.7
What change occurred in credit standards for agricultural loans at your bank in the past three months compared with a year earlier?†
Credit standards 2017:Q2 2017:Q3 Tightened Same Loosened
10.9 8.5 10.1 88.4 1.6

Anticipated Farmland Values and Credit Standards

*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.



Table 1
Rural Real Estate Values—Third Quarter 2017
    Banks1 Average value2 Percent change in value from previous year3
  District* 101 1,824 3.1
  Texas* 88 1,841 2.9
1 Northern High Plains 10 928 4.3
2 Southern High Plains 11 759 10.1
3 Northern Low Plains* 7 885 4.9
4 Southern Low Plains* 8 1,059 -5.7
5 Cross Timbers 6 1,683 -6.1
6 North Central Texas 15 2,697 4.3
7 East Texas* 6 2,804 6.8
8 Central Texas 12 3,600 -9.0
9 Coastal Texas 5 2,120 12.2
10 South Texas n.a. n.a. n.a.
11 Trans-Pecos and Edwards Plateau 6 2,083 11.9
12 Southern New Mexico 4 363 5.7
13 Northern Louisiana 9 2,689 7.2
  District* 75 2,548 5.0
  Texas* 61 2,222 2.9
1 Northern High Plains 10 2,100 2.7
2 Southern High Plains 10 1,590 2.4
3 Northern Low Plains* 5 2,218 20.2
4 Southern Low Plains 7 1,407 -1.6
5 Cross Timbers 3 3,383 0.0
6 North Central Texas 5 2,750 2.4
7 East Texas 3 2,800 16.7
8 Central Texas 7 4,114 0.7
9 Coastal Texas 4 2,275 7.8
10 South Texas n.a. n.a. n.a.
11 Trans-Pecos and Edwards Plateau 5 3,200 0.0
12 Southern New Mexico 5 4,100 5.6
13 Northern Louisiana 9 4,206 18.3
  District* 119 1,677 -0.1
Texas* 106 2,000 0.5
1 Northern High Plains 10 720 1.8
2 Southern High Plains 9 678 0.0
3 Northern Low Plains 7 943 7.4
4 Southern Low Plains* 9 1,092 0.0
5 Cross Timbers 8 2,025 0.0
6 North Central Texas 16 2,791 4.7
7 East Texas 12 2,754 1.6
8 Central Texas 14 4,736 -1.9
9 Coastal Texas 4 2,388 -1.3
10 South Texas 4 2,400 1.9
11 Trans-Pecos and Edwards Plateau 13 1,669 -0.8
12 Southern New Mexico 5 280 -12.0
13 Northern Louisiana 8 2,025 -4.8
*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.
Table 2
Interest Rates by Loan Type
    Feeder cattle Other farm operating Intermediate term Long-term farm real estate
  Fixed (average rate, percent)
  2016:Q3 5.98 6.07 5.96 5.72
  Q4 5.98 6.11 6.03 5.72
  2017:Q1 6.19 6.24 6.21 5.95
  Q2 6.05 6.17 6.05 5.89
  Q3 6.17 6.30 6.24 5.93
  Variable (average rate, percent)
  2016:Q3 5.60 5.63 5.64 5.36
  Q4 5.65 5.65 5.63 5.29
  2017:Q1 5.73 5.74 5.80 5.47
  Q2 5.75 5.81 5.74 5.47
  Q3 5.92 5.96 5.95 5.64
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