Bankers responding to the first quarter survey reported weaker conditions overall in most areas of the Eleventh District. Survey respondents noted that extreme drought conditions are straining agricultural production. Furthermore, they noted that the increase in raw material prices is not enough to compensate for the higher increase in input costs. “Inflation has hit rural America. Everything costs more and the selection is limited,” said one survey participant.
Demand for agricultural loans declined in the first quarter of 2022, with the Loan Demand Index returning to negative territory after posting its first positive reading since 2015 last quarter. Loan renewals or extensions declined for the fifth consecutive quarter, while the loan repayment rate continued to increase. Loan volume decreased for feeder cattle loans, dairy loans and crop storage loans compared to a year ago (Figure 1).
Cropland and irrigated dryland values increased this quarter, while ranchland values were flat (Figure 2). According to bankers who responded in both this quarter and the first quarter of 2021, the value of cropland and ranches rose at least 10% year over year in Texas and the North. Louisiana, with some segments seeing much larger increases (Table 1).
The anticipated trend for the farmland value index hit a new high in the first quarter, suggesting that respondents expect farmland values to continue to rise at a healthy pace. The credit standards index recovered and remained in positive territory. The continued positive value of the index indicates a further tightening of norms on the net (Figure 4).
next release: June 29, 2022
Agricultural survey is compiled from a survey of farm bankers in the Eleventh District, and the data has been seasonally adjusted where necessary. The data was collected from March 1-9 and 85 bankers responded to the survey.