Ranches, dairies hurt by drought

Aug 12, 2011

A Texas cattleman dropped his head and covered his face with a program when a photo of lush, green pasture flashed on the presenter’s screen.

Cattle producers are making tough decisions to liquidate their herds as drought and high temperatures stretch on in Texas and Oklahoma.

“Look at that grass,” Larry Pratt said during a presentation at the National Cattlemen’s Beef Association (NCBA) summer meeting. A historic drought across the southern Plains caused tales echoing in the hallways of painful choices, shared most by ranchers whose name badges included a TX or OK. Yet, several economists pointed out the market is giving strong signals to rebuild the long dwindling herd.

“It seems like it’s been our year for disasters,” said Texas Farm Bureau cattle specialist Jon Johnson about the drought and wildfires that scorched more than a million acres this spring. “We’re just praying for a hurricane, as devastating as that is. We’ll survive.

We always have. We always will.”

There’s simply no water left in many parts of Texas. Hay prices are skyrocketing. Silage quality and availability are doubtful. Some ranchers are burning pastures and feeding prickly pear just to keep their cattle alive.

Dairy feed and the dairy cows themselves are drying up. Breeding stock is being sent to slaughter. Half-milelong lines of semis form at the sale barns before 7 a.m., many of them turned away because there aren’t enough hours in the day to sell all the cattle. Freshly-weaned calves are going on feed. Some are shipped out of state.

“We’re estimating that the beef cow herd on Jan. 1, 2012, will be 600,000 to 750,000 head smaller yearto-year in Texas,” said Jim Robb, director of the Livestock Marketing Information Center. That’s the largest numerical drop in history and the second largest percentage decrease. “If it got really ugly, you could forecast on the outside about getting to a million year-toyear. We’re not expecting that at this point in time. We have cows in feedlots; we’ve got cows moving states. We’ve got people struggling in cases. But we’re on the cusp where you could get to that.”

Don Smith, who runs a dairy operation in Sulphur Springs, TX, said two dairies near him shuttered their barns in the past three weeks. It’s literally drying up as weeks of 100-degree temperatures wear on. “We keep running them through the barns for fun. They don’t want to eat” and have stopped producing milk. He said his cows try to splash what little water is in their troughs on the ground, so they can cool down in a mud puddle.

Bo Kizziar, chairman of the Texas Cattle Feeders Association and feedlot operator in the Texas Panhandle, said he put 5,000 calves on pasture and cake in Oklahoma Panhandle in February, which he does every year until they’re ready to go to the feedlot in October.

“This week, we’re bringing the last 500 head,” he said. “We started the first of July, thinking we were waiting on a rain. So we lightened up a little bit, hoped it’d rain the next week. And we didn’t get the rain next week so we pulled in another four loads. We just progressed until we’ll have all 5,000 head in the feedlot.”

Pratt, Johnson and Smith said that’s what most cattlemen have been doing. Sept.

1 seems to be the next big decision date. Ranchers liquidated the oldest, poorestreproducing mother cows in their breeding herd first and are now down to the core elements necessary to maintain their herd. Many cow/ calf producers are now struggling to decide whether to completely sell out, either for good or until the grass comes back.

As the ranching population ages, this drought could mean retirement for many. For cattlemen who elect to buy back into the business, the options are grim. “Where will they put the money with the stock market on the fritz?” Johnson asked, especially since buying back the cattle could cost 15 percent more when the grass comes back.

It takes time, and really good management practices, to acclimate cattle to a new environment and new kind of forage. “It doesn’t happen without losses,” Kizziar said. “She can be out there standing in forage (chest) high and she’s losing weight. Nutritionally, she just can’t support herself.”

As producers sell their herds, mother cows are sent to slaughter. Their calves are sent to feedlots. Excess feedlot capacity is starting to fill up, which is good for now, Kizziar said.

“As a feed yard operator, I’m really concerned about what my feed yard occupancy is going to be doing for the next turn of cattle. We know what cattle we’ve got; they’re leaving and we’ve got to replace them. I’m not sure where that next turn of cattle comes from,” he said. Feeder cattle will become more expensive as their numbers shrink and competition for them heats up.

“If we stay in this drought and if it doesn’t break until the fourth quarter, we’ll see the cow herd in the U.S. potentially declining into 2015,” Robb said. He forecast ranchers will make $90 to $100 per calf above cash costs and pasture rent, and northern ranchers are starting to think strategically about expansion.

All of this affects the revenue collected by the beef checkoff, another primary focus of the conference. J.D. Alexander, president-elect of NCBA, said it may not be noticeable at first, but the drought is “causing an unusually high amount of cattle to be sold, removed, processed, what have you. So the immediate effect may appear to be an increase in the checkoff. But longer term, when you have a lower herd, you have lower transactions; you’re going to have a lower checkoff as far as total dollars to spend.”

Alexander said it’s hard to tell at this point how many cattle are changing locations, going to confinement operators or being slaughtered. They’ll be able to forecast checkoff dollars more accurately when numbers on the drought’s impact are figured out.

Solid domestic demand and excellent foreign demand, a weak dollar and plenty of supply should keep demand for beef strong. Tom Field, NCBA’s executive director of producer education, said he sees plenty of reasons to be optimistic about rebuilding the cattle herd.

“The really positive news is this: If we can continue to get some trade movement, if we can continue to grow the economy, and if we can keep the demand thing rolling, the marketplace is setting itself up for a great opportunity for cattle producers. Drought is the short-term limiter, always has been, always will be,” he said. — DTN