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.

The cattle market recovered as expected from the dip three months ago. Dry conditions are a real concern going into the growing season along with prices. A lot of farmers that have historically grown corn silage are turning to milo this year, with the steep decline in price mostly due to dairies tightening their belts.

It is still extremely dry. Pasture conditions are not good, and farming does not project well for this year.

Below average irrigated crops and poor to very poor dryland crops have impacted the 2023 total ag revenue. Without the government’s Emergency Relief Program and the Stacked Income Protection Plan most of the ag producers would not have been able to pay out.

Land prices made a large jump this year in the Lubbock area and surrounding 50-mile radius due to speculation of development plus non-farm investors.

Weather conditions have been near perfect for the winter wheat crop and pasture. Timely and ample rains have also helped the pastures recover. Cow-calf producers are selling cattle at near-all-time high prices, while the wheat price is a concern for farmers. Economic conditions are a concern, as many input costs seem to keep getting higher.

Lower commodity prices and drought in 2023 have resulted in a significant increase in the number of producers that cannot pay off their operating loans for the year. Numerous restructures are taking place, and equity has been lost from multi-year droughts. Government help has been negligible. Some of the area has received beneficial moisture giving a boost in confidence for a better 2024 crop year.

Land prices are still high, but there are not many closings due to interest rates.

Smaller rural tracts between 10 and 50 acres are selling for $11,000 to $20,000 per acre. They are being sold for recreational purposes or to build homes or barndominiums.

Ag loan demand is increasing.

Very dry conditions persist in the lending area, with El Nino essentially being a non-event here. Cattle prices remain very strong, but with limited moisture, it is anticipated that most ranchers will be required to sell significant numbers of their base herds. Dairy woes continue, impacting forage crop farmers. Many are transitioning to non-dairy crops such as cotton and small bale alfalfa. The number of dairy cows on feed in Pecos Valley is significantly reduced from five years ago.

Current and projected commodity prices along with past years’ carryover balances are making cash flows rather difficult to show repayment. It is looking like another rough year ahead. Some farmers may have a difficult time staying in business.

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

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?

Tables