Surge in cattle sales blamed on drought

Feb 7, 2014

With California’s worst drought in history parching vast stretches of pasture and depleting water supplies, the Turlock Livestock Auction and other auctions are experiencing an unseasonable surge in cattle sales for this time of year as ranchers reduce their herds.

Meanwhile, the National Beef Packing Co. plans to close its Brawley, CA, processing plant in April due to a dwindling supply of available fed cattle, which will terminate about 1,300 employees.

The National Agricultural Statistics Service reports the U.S. inventory of cattle and calves totaled 87.7 million animals as of Jan. 1, down by about 1.6 million cattle or 2 percent as opposed to the same time last year—the lowest January inventory since 1951. Texas herds are down about 25 percent.

On Friday, Jan. 31, it was announced the State Water Project for the first time in its 54-year history will not provide water to urban residents or farmers in California this year because of the extreme drought, adversely impacting Kern County and other counties.

State officials have warned that 17 communities throughout California, the nation’s most populous state, could run out of water within 60 to 120 days. In some districts, wells are running dry because of depleted aquifers while reservoirs are nearly empty.

Ellen Martin, Media Specialist with the California Farm Bureau Federation, told WLJ that it is expected the California Federal Water Project—the single largest supplier of agriculture irrigation water in the state—also will announce zero allocation by the end of February.

“Hundreds of thousands of acres in the Central Valley will go unplanted,” Martin said, adding the economic impact on the San Joaquin Valley will be significant. The Farm Bureau strongly believes state officials could have done more to prepare for the prolonged drought, she said.

Industry officials said California farmers confronting drastic cutbacks in irrigation water are expected to idle some 500,000 acres of crop land this year in a record production loss that could cause billions of dollars in economic damage.

The extremely low amount of water in California’s snow pack is definitely the worst on record, Martin said, noting ranchers are especially hard hit and forced to sell off their cattle due to the lack of grazing land and dearth of water.

Max Olvera, Turlock Livestock Auction Owner/Partner, said his business is seeing a business volume normally not seen until the first of May and summer. Usually, 400 to 600 head of feeder cattle are sold each week at the auction in January and February.

“We’re selling numbers over 2,000 a week…in some cases 3,000,” Olvera told WLJ, noting those volumes started about Jan. 10 for three or four consecutive weeks. “This should be our slow time of year.”

California’s drought and record high cattle prices are driving the increased sales activity, he said.

“Any time there’s an opportunity to market these products at these record high prices, it’s pretty enticing to go ahead and start to sell cattle. … If there’s a bright side to our situation out there, it’s the market— calves, yearlings, slaughter cows and bulls. We’ve never seen a market like this in history. ” The lighter cattle weighing 300 to 500 pounds primarily are going to the Midwest and Northwest while area feedlots are buying the heavier cows 500 pounds and up.

The nation’s food supply is heavily dependent on California meat and produce.

California is the top U.S. farm state, producing half the nation’s fruits and vegetables.

Olvera noted the state’s dairy cattle industry is first in the nation and its beef cattle industry is fourth, behind Texas, Nebraska and Kansas. The dairy industry was showing signs of improvement, but the prolonged drought is changing that equation. Feed, grain and hay costs all are rising sharply.

If precipitation fails to materialize soon, that “will create serious havoc with all of California agriculture,” he said. “For the California ag economy, it’s very catastrophic. … It’s dire straits,” Olvera said.

Some places in the state recently got half an inch to an inch of rain. Ranchers and farmers are hoping a good storm will move through California to help reduce the lack of moisture, Olvera said, guessing that optimism may curtail cattle sales at the auction this month.

Late last summer and into the fall it was unusually dry in California. The first significant rain finally came on Dec. 3, but then it turned cold, Olvera recalled. There was no rain at all in California in January until the last day of the month.

“We never really got a start in the fall. Here in February it’s freezing in the mornings throughout most of the state,” he said.

California Citrus Mutual reported Feb. 3 that the state’s citrus growers lost about $441 million in revenue because of an early December freeze in California’s Central Valley, wiping out about 30 percent of navel oranges, 40 percent of re maining mandarins and 20 percent of lemons.

“A lot of folks I talk to are holding out optimism that somehow we’ll get a wet February and a ‘miracle March,’” Olvera said, mentioning some are comparing conditions to California’s drought of the 1970s. “A lot of old timers are saying they’ve never seen one quite like this over several decades. This quite possibly is the worst one they’ve ever seen.”

Ranchers with small, medium and large herds are striving to hold onto their cow herds, “selling the calf crop early, attempting to save the heart of the herd. If they have to liquidate, it’s very hard to replace,” Olvera said. “The priority is to do whatever they can to save the cow herd.” — Mark Mendiola, WLJ correspondent