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

• Very dry, winter wheat is in poor condition, the spring and summer crop outlook is not promising at this time, and there are skyrocketing input costs.
• There are extreme drought conditions. Cattle were off wheat pasture early, and they are lighter than normal. Input costs are much higher for farm operations.
• Inflation has hit rural America. Everything is costing more, and selection is limited. Gas is $3.19 per gallon today. Consumer confidence is at a low. We have had several large cash withdrawals recently from people concerned about cyberattacks. I will continue to trust that God will bless America.

Region 2—Southern High Plains

• This past crop year has been a Godsend for the majority of producers on the South Plains. There were good yields and good prices. However, for 2022, we are back to extremely dry conditions compared with early 2021. Producers have been advised to watch expenses closely due to the cost of inputs being up drastically. If insurance prices come out like we expect, most producers will wait until they have adequate rainfall to proceed with the crop.
• Thank goodness for last year. Agriculture really needed it. All of our line-of-credit loans were able to be paid in full. Drought conditions are hurting us in West Texas, and we could sure use a slow, soaking rain soon.
• Dry conditions continue to be a primary concern for the coming crop year. Insurance pricing helps to mitigate risk but at a higher cost to producers. Government program assistance (agriculture risk coverage and price loss coverage) is not anticipated outside of ad hoc disaster payments. Increased input cost and scarcity created great uncertainty and inherently higher risk. Demand for commodities remains high, and shipments continue despite historic pricing.

Region 3—Northern Low Plains

• Extremely dry conditions and high input costs outweigh high commodity prices. Cattle liquidation has started with stocker cattle going to market sooner than anticipated due to drought. Dryland wheat crop is nonexistent. Producers are concerned about availability and price of chemicals, fertilizer and parts for this crop season. The increase in commodity prices is not enough to offset the bigger increase in input cost.
• We are experiencing the driest conditions seen in my lifetime. Three fourths of the wheat planted in the county has not emerged or is just now emerging. No cattle are grazing for the first time in years. This county is 95 percent wheat/cattle. The upside is price support from revenue protection through crop insurance.

Region 4—Southern Low Plains

• Rain is needed. Commodity prices are good, but costs have increased significantly.

Region 6—North Central Texas

• Input cost for 2022 is much higher than last year. We need rain! Diesel is going through the roof; we need to start drilling and become energy independent again.
• Smaller tracts of rural land (10–25 acres) are selling for approximately $15,000. These tracts appear to be primarily being purchased for home sites not considered to be agricultural properties for ranching.

Region 7—East Texas

• Dry conditions as well as cold have row crop farmers behind in planting. As expected, input costs have risen but are hopefully offset by good projected commodity prices. Pastures need rain; January/February freezes severely damaged small grain fields. Recent high real estate sales in the area are getting a lot of attention.
• Demand remains strong for all types of agriculture loans.

Region 8—Central Texas

• Land values continue to climb. The biggest factor at this time is tax-free exchanges; lots of people in the I-35 corridor are selling long-held properties and are doing exchanges for rural land. Lots of people are still getting out of the big cities and moving to rural areas. We missed most of the rains the past few months, and we are beginning to feel the drought coming back. Lots of hay were feed the past 30 days, and with fertilizer prices still at all-time highs, hay could get more expensive as the months drag on. Oil and gas drilling is still in the area, with oilfield traffic picking up.

Region 9—Coastal Texas

• It would help if banks could compete with the nontaxable funding sources—for instance, the farm credit system. They have a tax advantage over banks in funding loans as they do not pay income tax. We would hope that Congress would also extend the same treatment to community banks.

Region 11—Trans-Pecos and Edwards Plateau

• Agricultural land values are being supported a great deal by recreational-use buyers and some investors, with true agricultural operators being less in numbers. Pastures are very dry, and rainfall is desperately needed. While some old grass remains, its nutritional value is questionable. Supplemental feeding is critical and increasingly more costly due to increased feed costs. The one positive is that the market values on livestock—sheep, goats and to a lesser extent cattle—are exceptionally good and seem relatively stable currently.

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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