By Jessica Domel
Multimedia Reporter
The downturn of the agricultural economy continues to weigh on Texas farmers, ranchers and dairymen.
Low commodity prices for some crops have reportedly caused credit conditions in some regions of Texas to deteriorate.
Banks report more requests for operating loans, loan extensions and renewals for those involved in agriculture, according to the Federal Reserve Bank of Dallas.
“Some respondents said they are tightening credit conditions, and a couple noted producers will likely have carry-over debt,” the third quarter Agricultural Survey from the bank states. “A few bankers expressed concern that farm incomes will be lower, and producers’ cash flows will be tighter.”
The rate of loan repayment this quarter is down 3.9 percent.
Loan renewals and extensions are up seven percent. That’s an increase of 3.1 percent over last quarter.
Demand for new agricultural loans was down 11.1 percent.
Requests for operating loans are up 3.8 percent this quarter, but farm machinery loans and farm real estate loans are down 13.1 percent and 10.3 percent, respectively.
Land values across the state are also changing during this downturn in the farm economy.
Rural land prices in Central Texas have softened over the past quarter, according to the Federal Reserve Bank of Dallas, especially for larger tracts and those with no improvements or recreational use.
Demand for feeder loans is steady.
The value of dryland acreage is down nine percent this quarter to an average of $3,600 an acre, not adjusted for inflation.
Irrigated cropland is valued seven percent higher this quarter at $4,114 per acre in Central Texas.
The value of ranchland is down 1.9 percent to an average of $4,736 per acre.
In the Northern High Plains, cropland values are up 4.3 percent to $928 per acre on average, and irrigated cropland values are up 2.7 percent to an estimated $2,100 per acre.
Ranchland values are up 1.8 percent to an estimated $720 per acre.
In the Cross Timbers, dryland values are down 6.1 percent to an average of $1,683 per acre, and irrigated cropland values are steady at $3,383 per acre.
Ranchland values are also steady at $2,025 per acre.
Dryland values in the Coastal Bend, which was hit hard by Hurricane Harvey this quarter, are up 12.2 percent to an average of $2,120 per acre. Irrigated cropland values are up 7.8 percent to $2,275.
Ranchland values are down 1.3 percent to an average of $2,388 per acre.
According to the Federal Reserve Bank in Dallas, land values along the coast are largely driven by recreational use.
South Texas values were not available in the report.
In Far West Texas, the Edwards Plateau and Trans-Pecos areas dryland values are up 11.9 percent to an average of $2,083 an acre.
Irrigated cropland values held steady in the third quarter at $3,200, on average, per acre.
Ranchland values declined in the third quarter to an estimated $1,669 per acre.
The Kansas City Federal Reserve Bank reports farm income is down, but appears to be stabilizing, as the rate of decline is smaller than in recent years.
The bank reports the prolonged downturn in the farm economy is working into the capital of farmers, ranchers and dairymen.
Nearly 82 percent of bankers in that region reported a year-to-year decline in crop farmers’ working capital.
Inbox: Low commodity rates take toll on farm, ranch capital (9 of 467) . There seems to be a great disparagement between these two reports..That along with the report of high employment..What drives “commodity rates”? Thanks!
Good question. Commodity prices are driven, largely, by world supply and demand. Right now, there’s a global glut of wheat. There’s much more wheat on the market than manufacturers are buying, so the price paid to farmers for the commodity is pretty low. The problem is, in some soils that are lighter, wheat is one of the only crops that will grow there well. So farmers plant wheat. Politics can also affect the market, which affects the commodity rates. For example, the fear that the U.S. may pull out of the North American Free Trade Agreement (NAFTA) pushed Mexico to look elsewhere for the corn they usually buy from the United States. While it’s usually more costly for Mexico to buy from Brazil, several factors (including the possible NAFTA exit), pushed Mexico to buy some of their corn lot from Brazil this year. So that affected the total demand for U.S. corn this year, which will weigh on commodity prices and the price farmers are paid for their grain.