Grazing management crucial in drought
Torrington – The ultimate goal of livestock grazing management is to take something consumers don’t want to eat and turn it into something they do want to eat – like a thick, juicy steak.
John Ritten’s opening remark during a recent presentation garnered more than a few chuckles from around the room, but Ritten reiterated the importance of matching our demand to supply, particularly during drought.
The University of Wyoming Ag Economics associate professor and Extension economist was in Torrington recently to discuss long-term strategies for operations during market changes and changes in spring precipitation,during the Southeast Wyoming Beef Production Convention.
His take-home message was simple.
“There is no strategy that is 100 percent correct. Producers have to be ready to respond to the market, the weather and the current situation,” Ritten said. “One thing they can bank on is there will be another drought – it is just a matter of when.”
Looking at data
Sharing a survey conducted amongst Wyoming ranchers about what they do when there is a drought, Ritten was surprised to learn most producers are reactive. The top three answers in the survey were to destock breeding stock, feed through a drought or wean calves early.
“Production really matters,” Ritten stated, “but when there is a drought, most people react. ‘We’re in a drought. What do I do now?’”
Ritten realizes no one can control the weather, and the weather controls the forage supply. Spring and some winter precipitation are major influences on annual forage production, which can be hard to predict and varies from year to year.
“We want to have cows because they make us money, so the challenge is making demand match supply. We can control demand, but supply is less under our control,” he said.
After the survey, Ritten said they looked at the responses to drought and compared how those scenarios would hold up through wet and dry periods over years.
Some producers destock their breeding herd when there is a drought and forage is lacking. Once the drought is over, producers want to rebuild, so they retain their replacement heifers to keep the genetics they have built up.
But the problem is they already have less income because they sold some of the factory during the drought, and now, they will have even less income because they kept their replacement heifers, Ritten said.
The upside is, liquidating cows during the drought will produce some cash flow, but after the drought, there will be less cash flow to carry producers through since there are less calves and are retained more of them.
Feeding through drought
Feeding through a drought can be expensive, Ritten continued. Some cows may still be liquidated but maybe not as many.
“What generally happens is, I may be signing more checks on the front than on the back, so I won’t have the inflow of cash during the drought, like the guys who liquidate do,” he explained. “But, when the drought is over, I have calves to market, versus the guy who liquidated and has a lag period to rebuild. As soon as the drought is over, my cows are making money.”
Producers also have to be leery of importing forage into their operation during droughts.
“We don’t want to bring in hay with cheatgrass or Medusahead,” Ritten stated.
Producers who choose to wean early will have smaller, lighter calves to market and may not make much money, but they won’t have to sell many cows, Ritten said.
Once the calves are pulled, those cows have an opportunity to rebuild body condition and breed back.
Post-drought, producers still have their cows, but they generated less income during the drought since the calves were weaned early.
Some proactive producers look at diversification as the answer. If they can add a certain number of stockers or yearlings to the operation, they can maintain enough forage for their cows during a drought.
“The idea is to not have a monoculture and have one pest come out and take out the corn crop, so to speak,” he explained.
Ranchers need to define the full capacity of their operation during an average or normal year and then determine how many cows the ranch could carry during a drought.
In this scenario, they can have the number of cows the ranch can carry during a drought and fill out the capacity during normal and wet years with yearlings.
Ritten warned producers to consult with an accountant because there could be tax implications if producers reduce their breeding herd numbers.
“I would recommend doing it in stages,” he suggested.
Ritten said none of the strategies are 100 percent right for every operation.
“Basically, Wyoming ranchers typically make more money with calves than yearlings, so weaning early may be more of an option,” he explained. “We also found that if a drought lasts more than two years, feeding no longer beats liquidation.”
“If the drought lasts five years, the diversified operation is better because producers can decrease their costs during the drought, and they don’t have to destock, which means less cows to rebuild,” Ritten commented. “The cows can breed back and will be in better condition.”
Other factors should be considered. Retaining heifers or buying replacements after a drought can be at the mercy of the price cycle.
“What commonly happens is we sell the cows low during a drought and have to pay more after the drought because everyone else is also trying to rebuild,” Ritten explained. “Those replacements may end up being very expensive.”
The biggest expense in rebuilding may be developing that heifer.
“If prices are high, we may want to consider delaying rebuilding until prices are lower,” Ritten suggested. “Waiting to rebuild, if the market is high after a drought, may make sense if we can cash flow it and handle the tax implications.”
He added, “If the heifers are at a good price point, maybe we could sell high-value cows and rebuild in the future if the banker will allow it.”
“Anytime we are going into or coming out of a drought, I would strongly recommend talking to the banker. They may have a limit on what we can do. Have a good plan and be proactive because there will be a drought again,” he said.
Gayle Smith is a correspondent for the Wyoming Livestock Roundup. Send comments on this article to email@example.com.