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 2024 cotton crop on the High Plains turned out to be a wreck—low cotton prices, reduced yields and high input costs. The proposed FARM Act payment of $84.70 per cotton acre will help reduce 2024 operating loan balances; however, we are seeing many producers with 2024 carryover debt even after receipt of the proposed payment. With the payment details yet to be announced, the 2023–24 disaster payment has made underwriting 2025 operating loans very difficult. Most producers don't have the ability to service any additional carryover debt based on the current cash flow projections. The lingering drought remains a concern. Cattle producers are one segment of the agricultural sector that remains profitable.

• Worsening drought conditions are taking a toll on winter wheat in the area. Without significant rainfall soon, the crop will fail and will need to be plowed under. Fewer stocker cattle are being turned out on the wheat. While cow-calf producers are benefiting from good prices at the sale barn, grass conditions are poor, and most of the hay supply has been depleted. Producers are tightening their belts and limiting spending to essentials.

• With no rain in 120 days, conditions are beginning to weaken. Rain is needed soon for the wheat crop. Cattle conditions are good, and the market is very strong. Cattle prices are about 10 times what they were 50 years ago. The cotton price is about the same as 50 years ago. 

• Corn planting in the area is complete, and we are waiting on a rain. Pastures need rain for grazing and hay prospects. Commodity prices have operators pessimistic about this year.

• The rice producers in particular are concerned about profitability in 2025.

• Most of our farm operating notes have been renewed or booked for the 2025 growing season. First-quarter farm packages revealed several operators carrying substantial outside vendor credit that may have resulted from multiyear losses or effects of Hurricane Beryl. Loan volume has increased by terming out excess vendor credits and carryovers. We have imposed stricter loan covenants and terms for borrowers on outside vendor credit. Borrowers are more price sensitive given inflated input costs and weak crop commodity price futures for our local area. Cattle prices across the board—feeders, stockers and breeding stock—remain elevated and are expected to stay elevated as demand remains strong and spring forages are beginning to show. Recent reports on demand for beef indicate strength, and when coupled with a 60-plus-year low of inventories of breeding cattle and replacement females, we project cattle prices will be strong into the intermediate future.

• The market is flooded with alfalfa hay with many barns still full or near full. Price reductions after the first of the year have resulted in some of the carryover inventory moving. Cattle prices remain favorable, but drought continues to stress ranch resources and ultimately will impact herd size significantly if the weather pattern doesn't become more favorable. Farms are gearing up for the spring planting season as well as the wheat harvest.

• The anticipation of the Meta megasite in the area has caused land values to increase considerably; however, those factors were not included in the answers to this survey. The purchase of many acres of farmland by Meta has displaced some farmers due to the loss of rented land. This has caused a shift in farmland, and the sales price of general land is increasing to reflect this influence.

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