Agricultural Survey

Survey Highlights

Bankers responding to the fourth-quarter survey reported overall better conditions across most regions of the Eleventh District due to recent rains and improved moisture. However, high interest rates and input prices continue to push production cost up and are a big concern to farmers.

"Most of the wheat is planted, with an increase in acreage compared to the last several years. Rain has been good, and conditions are improving," a survey participant said. "Area ranchers remain challenged by continually increasing costs, particularly in feed, fuel and other supplies," another survey participant noted.

Demand for agricultural loans decreased for the fourth straight quarter in fourth quarter 2022, with the loan demand index dropping to its lowest level recorded. Loan renewals or extensions fell for the eight quarter in a row, while the rate of loan repayment continued to increase. Loan volume decreased for all categories compared with a year ago (Figure 1).

Ranchland and irrigated values fell this quarter, while dryland values rose (Figure 2). According to bankers who responded in both this quarter and fourth quarter 2021, cropland, dryland and ranchland values increased at least 7 percent year over year in Texas, with some segments seeing much higher increases (Table 1).

The anticipated trend in farmland values index fell into negative territory, suggesting respondents expect farmland values to fall. The credit standards index continued in positive territory and increased further, indicating a tightening of standards on net (Figure 4).

Next release: March 27, 2023

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

• The inflationary pressure on ag inputs has caused us to raise the operating lines for most of our customers. This is great for loan demand but not so great for our customers' profitability. We are still in extreme drought, and winter wheat grazing availability will be down quite a bit. Corn yields were below the five-year average, but price made up for it some. Unfortunately, the better historical marketers missed out on a lot of the high prices since they contracted early.

Region 2-Southern High Plains

• Rising interest rates have created concern with all ag producers. The past three years of marginal cotton crops related to drought conditions, plus fluctuation in prices, have also contributed to concern. It appears at this time that some cotton growers may be looking at grain crops rather than cotton where moisture is available. Input costs are much less for grain crops than the higher costs of seed and herbicide related to cotton production.

Region 3-Northern Low Plains

• What a difference a year makes. This time last year, we had no wheat emerged. This year, we have one of the best starts to a wheat crop in 20 years. Price is good. Cattle are being turned out on wheat.

Region 4-Southern Low Plains

• Due to the dry spring and summer, the cotton crop was failed. Multiple Peril Crop Insurance (MPCI) payments were very good due to a good insurance price. Expenses are down due to no crop. The second crop of hay was fair and at a good price. It's a very good year, with all lines paying as agreed. Cattle line volume is down due to dry weather and herd liquidation. Stocker numbers were below normal due to dry weather. The wheat crop is late but in good shape due to recent rains. [We see] higher wheat acres, but we expect cotton acres to drop due to higher input prices.
• Most of the wheat is planted, with an increase in acreage compared to the last several years. Rain has been good and conditions are improving. [We see] some high and quick land sales driven by cash on hand and year-end planning.
• Rainfall has improved conditions, but input costs remain high.

Region 6-North Central Texas

• [There have been] no known ag real estate transactions in the past three months.

Region 7-East Texas

• Loan demand is slowing. Rising interest rates and input costs are a big concern for farmers and ranchers.
• Farmers are beginning to put together budgets for 2023 with a slight reduction in costs, but projected prices look to be weak. [We have] good moisture going into winter, and hopefully [it will] carry over to spring planting. Depending on the severity of winter months, hay inventory could be short.

Region 8-Central Texas

• Beneficial rain over most of our area has helped the oats and rye grass grow, which has helped ranchers keep their short hay supplies. Cattle prices and numbers remain high as we near the end of the year. There should be a high demand for open and bred heifers in 2023 if it continues to rain.

Region 11-Trans-Pecos and Edwards Plateau

• Area ranchers remain challenged by increasing costs, particularly in feed, fuel and other supplies. Livestock sales values have decreased some but remain well above historical levels, especially in sheep and goats, though they are seeing a lot of price volatility from week to week. Hunting income remains very important to overall income for most ranchers. Coyotes and hogs remain a problem for most ranchers. Pasture conditions are generally short, though recent moisture has been good for beneficial weed growth.
• Government stimulus payments have helped producers reduce farm debt and have shrunken the ag portfolio and decreased demand for loans. At the same time, inflation and exponentially increasing input costs have prompted some producers to decrease planted acres.

Region 12-Southern New Mexico

• We've had decent moisture this fall, and producers are cautiously optimistic about the next operating cycle. Input costs continue to be an item of concern.

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?

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

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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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Tables