Drought continues to affect hay and forage, range and livestock production conditions

The drought that is plaguing the nation is not forecasted to improve as agriculturalists move into the growing season. According to the U.S. Drought Monitor, nearly 64 percent of the nation is in some severity of drought. 

Hay production

The National Climatic Data Center reports that America is in the midst of the most expansive drought since December 1956. This has impacted producers across the United States and significantly decreased crop and hay production. The 2012 USDA Annual Crop Production Summary stated that the total U.S. hay production that year was 120 million tons, down almost 18 percent from the 2006 to 2010 average. 

This is the lowest U.S. hay production total on record. 

The wallets of livestock producers are being dealt a heavy blow due to the low forage production total. 

Across the state of Wyoming, alfalfa hay is sold at an average of $200 per ton when hay can be found. This is nearly twice as expensive as 2011 hay prices. In August 2011, Wyoming alfalfa hay sold for an average of $123 per ton. Lower quality hay sold for roughly $115 per ton in that same year. 

This trend is expected to continue. 

According to the USDA, the futures forecast calls for “continued escalation” in hay prices, with weather determining how high they will go.

The price hike has contributed to the scarcity of the hay. Forage supplies were severely depleted due to increase hay feeding and decreased hay production. Records that have been kept since 1974 show that hay stocks were at 76.5 million tons, the lowest on record. 

Ranges and pastures

Unfortunately, the range and pastures did not fare better than the fields. 

The final range and pasture report at the end of October 2012 listed 15 states with more than 60 percent of pastures in poor or very poor condition. Five additional states had 40 to 60 percent poor to very poor conditions. 

“The problem is that last year was bad,” said John Ritten, assistant professor in agricultural economics at UW, “but the year before, at least in Wyoming, we had a buffer. This year, we are coming into the growing season and probably 60 percent of the range is going to be degraded before we start grazing. There is not a lot of grass out there, and many people are feeding hay, waiting for the rain to come.”

“If the rain does not come, we are in trouble,” he added.

The situation puts many producers in a tough situation with their herds as they decide whether or not to feed their animals through the winter. Decreased availability of forage, combined with scarce water, is prompting producers to begin another significant round of cattle herd liquidations unless the drought becomes less severe. 

“You can feed your way through a drought, but it only pays if prices are expected to rise,” said Ritten. “Right now, we are expecting prices to rise, but there is a lot of uncertainty out there and a lot of risk feeding through a drought, especially a prolonged one.”

Industry impacts

Although cattle are increasing in carcass size and yield, U.S. cattle herd numbers have decreased dramatically. 

USDA’s semi-annual cattle inventory survey for January 2013 showed a continuation of the herd reduction that began in 2007 and shows that as of Jan. 1, cattle numbered 89.3 million head. A shocking statistic showed the Texas beef cow inventory is 1 million head, or roughly 20 percent, smaller than two years ago.

This appears to be a trend that will not change. According to an article on the Northern Ag Network, government data shows that beef output in the U.S. will drop for a third year in 2013 after drought destroyed pastures. Farmers are being forced to make the difficult decision whether to feed their herds or sell the animals. This has lead to the smallest herd size since 1952.  

In their article, 2012 Drought Conjures up Dust Bowl Memories, CNN states that ranchers have been forced to sell off their cattle prematurely because they had no other choice. 

The cost of feeding the cattle was greater than it was to keep them, and it will take a while for operations to bounce back. Even if pastures improve or hay prices drop, those who sold off their livestock in recent years likely cannot afford to buy the same numbers back and return to normal business practices in the near future. 

Retail beef

Fewer cattle numbers likely mean record beef prices in the coming year. The Livestock Marketing Information Center predicts that the record beef prices for this year may mean higher costs for retailers and restaurants. 

“The biggest problem is going to be two or three summers down the road,” added Ritten. “This summer won’t be as bad in terms of retail beef because we are going to see a lot of cows being turned into hamburger, which keeps downward pressure on retail costs this year, but if we have continued reduction in national herd numbers, we are going to see prices really intensify because there will not be as many calves hitting the market to go into feedlots.”

Many feedlots are also feeling the economic pinch. 

According to the USDA, feedlots lost about $100 per head in 2011. January, the best month fiscally, showed losses that totaled only $36 per steer. Current forecasts are for losses of at least $100 per steer in the early months of 2013, with improvements expected only if either cattle or grain prices drop significantly, which is not anticipated.

Kelsey Tramp is an intern for the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.