Drought has had a widespread impact on all areas of the beef industry. To stay in business, water is the name of the game.
Water equals life. It’s a simple equation that all farmers and ranchers understand. Without the rain, farmers and ranchers would not be able to feed domestic consumers or the growing global population.
In the past few years, drought has touched all parts of the nation and has taken its toll on the U.S. beef industry by forcing producers to reduce cow numbers, cutting feedlot capacity and diluting the number of packing plants.
A weather outlook presented during the CattleFax annual outlook seminar at the Cattle Industry
Convention this past February painted a more promising picture for what is to come.
However, it was also a stark reminder of just how widespread the drought has been.
"El Niño is coming," says Art Douglas, a weather analyst for CattleFax. "I think this is a real positive thing that we’ve got going here."
Douglas says an El Niño weather pattern this summer will bring rain to the Midwest and much of the West, similar to 2010. He cautions that 2010 was the same year when drought developed in the Southeast, the first hint that La Niña was coming.
"By the time we got into 2011, drought was pretty prominent from New Mexico to Texas, all the way to the southeastern U.S. That was in direct response to the La Niña conditions and cold water conditions developing around the Equator," Douglas says.
"Of course, the worst year was 2012," he adds. "The Palmer Drought Severity Index was at a near-record high for a lot of the country in 2012."
The major drought was a result of both La Niña conditions and very cold water off the West Coast from the Gulf of Alaska all the way down to California.
In 2013, the outlook was better for the central U.S., but the drought has since moved westward into California and surrounding states.
"What it is really getting ready to do is repeat the cycle all over again and go back to 2009/10 with El Niño and improved moisture in the West. This cycle of drought developing in the Southeast in 2010, spreading into the Southern Plains in 2011, into the Midwest in 2012 and finally moving back to the West Coast is about to repeat itself," Douglas adds.
These Holstein steers at Pinal Feeding Company in Arizona came from a drought-stricken region of California. Because of the Brawley, Calif., packing plant closure, calves from California will have to be shipped farther east.
Cattlemen start to bounce back. The severe dry weather has led to liquidations on many cow-calf operations across the nation.
No place has been hit harder in terms of cow culling and cow relocation than Texas, where 1.1 million head have left the Lone Star State since USDA’s cattle inventory report in 2011.
The Ortiz Ranch near Laredo, Texas, was also negatively impacted by the drought and saw nearly 400 cows leave the 1,000-cow operation.
Frank Matthews manages the 600 head of cows that remain on ranch and is looking to rebuild from within by keeping back more replacement heifers, but weather and water will dictate how the program goes.
"It’s more anticipating and reacting to the different weather conditions we have down here," Matthews says. "Weather is a big thing. We go through two- or three-year droughts where it is just horrible, and then, like this year, we’ve gotten twice as much rain as normal on the ranch."
The most recent period of drought did allow him to reevaluate water use on the Ortiz Ranch.
"Water was scarce—old ponds had silted in and dried up," Matthews adds. "We are fortunate enough to have a lot of water wells that are very strong from old gas wells that were capped."
During a two-year period, they dug miles of water line from wells to more than 30 new water troughs placed throughout the ranch. Well water was even used to help fill 15 ponds that had gone dry.
The increased access to water helped Matthews to better spread out the grazing of the cows.
"As it was, with just a few water sources, [cows] would stay around the water and graze it out real bad. By adding [more] water sources and scattering them around, we were able to keep our herd in good shape during the drought; we just had to cut back on numbers," he says.
Feeders feel the pinch. Lower cowherd numbers nationally have caused a chain effect reduction in other industry sectors, such as feedlot and packers.
Just this past month, Texas relinquished its title of the state with the most cattle on feed to Nebraska, according to USDA’s National Agricultural Statistics Service (NASS) annual cattle inventory report. In the past year, Texas saw 2.44 million head enter feedlots compared to 2.46 million in Nebraska. The 7% slide in Texas is part of a national trend that has about 10.76 million head of cattle on feed versus 11.07 million a year ago.
Because of the decreasing availability to cattle and water, West Texas is not a place that Jordan Feller, general manager of Feller and Company Cattle Feeding in Wisner, Neb., feels he would want to be.
"We don’t have a water issue; that’s the one thing we have on them," Feller says. "The feed is all around us, too."
The 15,000-head feeding operation utilizes five water wells sourced from the Ogallala Aquifer. Fellers & Company source some grain from neighboring farmers, but not all of the feed can be purchased directly, which made the last few years of drought difficult for the feedlot.
"It just wrecked the feed price. Corn got so high it took all of the profit out of feeding cattle," he says.
Ultimately, the future looks bright for feedlot producers in areas like eastern Nebraska, where there are fewer worries when it comes to availability of feed, cattle and water.
Nebraska feeders also have greater access to a larger number of packing plants than Texas feeders. Feller’s operation is within a 100-mile radius from four processors.
Cattle producers and feeders in regions more susceptible to drought have seen several packing plants leave the area. In January 2013, Cargill announced the closing of its Plainview, Texas, processing plant as a result of the drought in that region. A similar outcome is on the horizon for National Beef’s Brawley, Calif., packing facility, which is slated to close on April 4.
"The majority of the feedyards in the desert Southwest would be in southern California, around Brawley," says Bass Aja, feedlot manager at Pinal Feeding Company in Maricopa, Ariz. The feedlot operation has sent some cattle to the National Beef plant, but now the company will only have the JBS plant in nearby Tolleson, Ariz., as an option.
Not only will the closing of the Brawley, Calif., plant impact Pinal Feeding, but the drought in California could cause problems since the majority of the 130,000 head of cattle on feed at the three yards are sourced out of the San Joaquin Valley from dairy calf ranches.
"That’s been tough—not devastating, but tough," Aja explains. "The current drought has started to affect us a little bit. The calf raisers have a strain put on their input costs, and all of the cattle that go on grass in California are almost non-existent this year."
Pinal Feeding is located near Maricopa, Ariz., which has seen a boom in population the past few years. As the feedlot is only 45 miles from Phoenix, the urban sprawl is making the competition for land and water rights even more difficult.
"This county is tough for water because this county is constantly competing with the populations for their water," Aja says. "When it comes to crops versus people, people are always going to get the water."
For more weather outlook information, including drought resources, visit www.BeefToday.com/weather
To contact Wyatt Bechtel, email email@example.com.