Monday, July 16, 2012

Heat Leaves Ranchers a Stark Option: Sell

Zen Haven

As a relentless drought bakes prairie soil to dust and dries up streams across the country, ranchers struggling to feed their cattle are unloading them by the thousands, a wrenching decision likely to ripple from the Plains to supermarket shelves over the next year.

Ranchers say they are reducing their herds and selling their cattle months ahead of schedule to avoid the mounting losses of a drought that now stretches across a record-breaking 1,016 American counties.

Irrigation ponds are shriveling to scummy puddles. Their pastures are brown and barren. And they say the prices of hay and other feed are soaring beyond their reach.

“If we’re running out of grass and we’re not growing enough feed crops to feed them the other six months of the year, what do you do?” asked R. Scott Barrows, director of Kansas State University’s Golden Prairie District extension office. “You liquidate.”

So, in the latest pangs of a withering heat wave that has threatened crops and sparked furious wildfires, ranchers are loading up their cattle and driving to towns like Torrington, an old byway on the Oregon Trail near the Nebraska border. They come, reluctantly, to sell.

On a normal summer Wednesday, the Torrington Livestock Markets would be quiet, and cows and their calves would be out on waving fields of buffalo grass, gaining weight for the autumn.

But it is doing four times as much early-season business as usual, driven by parched conditions. Last month, 17,144 head of cattle were auctioned off, compared with 3,336 in June 2011.

“They’re getting frustrated, and they’re at a loss for what to do with their cattle,” said Michael Schmitt, an owner of the livestock market. Many cattle producers are selling off less-profitable animals with the hopes of holding onto part of their herd. But the smaller the rancher, the deeper their troubles, and the more they are cutting.

On this 90-degree July morning, anxious ranchers and poker-faced beef buyers filled the theater seats around the auction floor, ready to sell 1,700 cattle at a new weekly special: a drought sale.

“We’ve just been sitting here crying,” said a sixth-generation rancher named Mae Ann Manning, as she and a few friends sat in the cafeteria and waited for the day’s bidding to start. She was half joking. But half not. “We don’t know what we’re going to do.”

Ms. Manning and her daughter Debbie Murray came to sell 160 year-old steers. There had been little winter snow to moisten the ground at their ranches near Lost Springs, and the spring was hot and dry.

A wildfire burned three of their pastures. Now, with the summer sun frying what little grass remained and hay selling for $200 a ton, they decided to winnow the herd.

Because the cattle being sold now are younger and lighter than those fed all summer on prairie grass, ranchers are losing $200 to $400 for each one they are dumping early. That can mean the difference between a year’s profit and loss when multiplied out over herds numbering in the hundreds or thousands.

“It’s going to take two to three years to recover,” said Brit Moen, who was selling 150 black steers. He had raised them on grass under Wyoming’s endless skies, but after they tramped through the manure-covered auction floor, silent and nervous, they were likely bound for a feedlot in Kansas, Nebraska or Iowa, where they would be fattened up for slaughter.

“We’re all cutting down, and we’ll never be able to replace what we’ve got now,” he said. “If this is to go on for another year, it’ll put a lot of people out of business.”

Further down the line, the sales of cows and calves that might have otherwise produced more cows and more calves may play a role in reducing beef production, potentially driving prices higher, experts say.

But right now, ranchers selling early are getting less money per head because of tremors in the markets for corn and other cattle feed.

In its latest forecasts, the Agriculture Department expects overall American beef production to fall by about one billion pounds, to 25.1 billion pounds in 2012 from 26.2 billion a year earlier, and forecasts yet another fall in 2013.

High beef prices, which entice ranchers to sell more of their stock, and a long-term drop in domestic cattle supplies are also factors in the decline.


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