Irrigated land values in US cotton

Irrigated land values in US cotton

Prices for irrigated cropland, and ranchland in Texas, the top US cotton and beef producing state, are near record levels, the Dallas Federal Reserve said.But bankers are downbeat on price prospects in the future, suggesting a negative trend to come. And ranchers remain under pressure from rising predation, as wolves and bobcats threaten the future of the sheep and goat industry in the far-west of Texas, according to one surveyed banker.

Rising land values

The Federal Reserve Bank of Dallas, which covers Texas as well as parts of Louisiana and New Mexico, reported that “real district ranchland and irrigated cropland values increased this quarter, while real dryland values decreased”.

“According to bankers who responded in both this quarter and first quarter 2016, nominal district land values all rose year over year, with irrigated cropland showing the strongest increase.”But bankers surveyed were downbeat on prospects. “The anticipated trend in farmland values index remained negative for a seventh consecutive quarter, suggesting respondents expect farmland values to trend down in the coming months,” the Dallas Fed said.

Premium for irrigated land increases

Irrigated cropland prices in the region covered averaged USD 2,488.50 an acre in the first three months of 2017, the second highest level on record, up 7.8 % year-on-year. This is just below the record levels seen during July to September last year.

The premium of irrigated land to dryland prices is now at its highest level since the first quarter of 2015. Ranchland prices were also at their second highest level on record, at USD1721.10 an acre.

Predator pressure increases

The Dallas Fed warned of increased pressure from predation on livestock in the Trans-Pecos region of West Texas.

“Livestock pastures were mostly in good condition, but predators were seen as an increasing issue for ranchers. Predators continue to be a real problem for sheep and goat producers and, because of that fact, many ranchers have just gotten out of the business due to the cost of trying to combat the coyotes, bobcats and hogs,” commented surveyed banker.”It is an issue that actually threatens the sheep and goat industry’s future. Predators remain one of the main problems, including coyotes, bobcats and even reports of gray fox issues, as well as the exploded feral hog population and their destruction of fences, watering and pastures,” noted another banker. Farm economics remain constricted by low returns. “There were scattered reports of producers paying out their lines of credit, but in general, respondents noted a need for higher crop and cattle prices,” the Dallas Fed said.

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