Texas Study Tour Day 1

11 Nov Texas Study Tour Day 1

Day 1 – Sunday 9th – Texas Capitol Building and Meeting with the Texas Farm Credit Association

We kicked off our first full day in Austin with a group tour of the Capitol building from Patrick Dudley, husband of Dr Jean Dudley from the state university of agriculture who has been the key contact in the planning of the whole trip. Patrick used to work in the Capitol building in the Texas Department of Agriculture, his role is communicating with the state administered levy boards which cover 12 different commodities. Several of the key commodities are levied by federal boards like eggs, sorghum and dairy.

The Capitol building of Texas was built in the 1880s by a large number of Scottish stonemasons, it had an underground extension in the 1990s creating 2 floors underground and 2 floors of car-parking. The magnificent building housed both the Senate and the larger House of Representatives. Patrick gave us a great overview of both the history and the operation of the state politics. The Battle of the Alamo has been an influential point in the history of the state and it’s relations with Mexico, it’s neighbour. The Texan goddess of liberty faces south, towards Mexico unlike all other US Capitol buildings which face North. Patrick did emphasis the Texan approach to being different from other US states on multiple things.

Following our tour around the Capitol building we hopped on the coach for a 4 hour drive to Tyler, en-route we stopped for some lunch at a mall with 150 petrol pumps, the scale of most things in Texas is non-comparable to Scotland. We met with Joe and Kyle from Farm Credit who kindly provided us with a great steak dinner. Farm Credit is the largest bank in Agriculture in the USA and is a cooperative owned by it’s farming customers which is quite a common business structure in the USA for banking institutions, they were surprised to hear we have no coop banks in the UK. Another key difference was although they have nearly 40% of the lending exposure to agriculture in the US they have numerous competitors and were shocked to realise how few banks we had facing agriculture in Scotland and the UK.

The timing of this meeting was useful to gain a business insight into the current state of the different farming sectors in Texas, similar to the UK, beef is resilient and Joe alluded to a lot of recent lending towards herd expansions off the back of this. Cotton is a large commodity in Texas and we passed a few mills and farms on the way to Tyler, they are currently experiencing a depression based around market pressures from Asia due to Trumps tariffs, however good yields have been keeping the afloat.

Issues in the sector sounded familiar, the ageing population of Texan farmers, average age being 64 which is higher than Scotland at 60. Related to this access to land for new entrant and young farmers was a huge problem with the bank being the only option to provide start-up capital. It was interesting to hear how interest rates seemed substantially higher and the higher loan to value rates that were offered compared to what we were aware of in Scotland. The value of mineral rights owned on farmland were interesting and untied to the land as well so a farmer can own the land but not the rights to minerals on the same plot, with the prevalent oil industry in Texas mineral rights are not readily traded and are a ‘goldmine’ if owned.

We presented Joe and Tyler with a token of our appreciation and they were delighted to host us in Tyler, which Joe was very proud to call his hometown.

James Hay