“Drought conditions continue to be the driving factor in planning and budgeting this year.
If conditions persist, there will be fewer producers next year.” This comment from a banker in the Texas Panhandle paints a stark picture of how this year’s expanding drought is limiting business opportunities for farmers in the Southern Plains and Southwest.
The persistent dry weather is bruising the area’s winter wheat crop and limiting grazing opportunities, according to banker responses to the 2018 First Quarter Agricultural Credit Conditions Survey in the Eleventh Federal Reserve District—an area that includes Texas, the southern half of New Mexico and the northern half of Louisiana.
This is an improvement, as three months ago drought conditions plagued nearly 67% of the country.
Currently, the driest conditions cover the Texas and Oklahoma panhandles and the four-corner region of Arizona, Colorado, New Mexico and Utah.
These levels of exceptional drought cover 2.3% of the continental U.S., while extreme drought covers 9.3%.
According to the May 7 USDA Texas Crop Progress and Condition report, winter wheat in the north-central Plains remained in poor condition.
“Drought is hurting our ag customers, and we are approaching the critical stage,” reports a banker in the Southern High Plains of Texas.
While the majority—84.5%—of bankers surveyed say credit standards for agricultural loans have remained stable over the past three months compared to a year earlier, 15.5% say they have tightened.
Will the Drought Continue?