(This story is embargoed until 10 a.m. Wednesday, Aug. 5, 1998)
COLLEGE STATION -- Without rains in August, Texas cattle ranchers could face losses worse than the devastating drought of 1996 -- a blow that likely will put some ranchers out of business and leave the rest struggling for years to overcome.
Dr. Ernie Davis, agricultural economist with the Texas Agricultural Extension Service, said the drought since May has already cost livestock producers $451 million in losses. An estimated $126 million of that total involves direct revenue losses, as ranchers have had to liquidate their herds or sell lighter-weight cattle. The other $325 million is the estimated extra feed bill that producers have had to pay just to hang on to the cattle they are keeping.
Dr. Larry Boleman, an Extension beef cattle specialist at Texas A&M, suggests that this year's loss figures could double if it doesn't rain in August.
"There's no doubt, as I talk with ranchers and farmers, that they are in the greatest despair I've ever seen," said Boleman, who heads up the annual Beef Cattle Short Course now under way at Texas A&M University. The short course draws more than 1,200 ranchers to learn more about beef cattle production and this year, how to manage drought.
A doubling of this year's loss figures would exceed the $794 million that the 1996 drought cost Texas livestock producers. Thus far the drought this year has cost farmers and ranchers $1.75 billion in direct losses -- very close to the $1.9 billion in losses producers suffered two years ago.
With 5.4 million animals, Texas is the top producer of beef cattle in the nation and is usually the No. 1 hay producer as well. But the state probably will drop to nearly last place in hay production this year because it has made only 10 percent to 15 percent of its usual crop of dryland hay, according to Dr. Don Dorsett, Extension agronomist. In normal years, producers cut 3.5 million to 4 million acres of hay, producing 7.5 million to 9 million tons, he added.
Less hay is available for livestock producers, and the hay that can be found is more expensive. Normally, the price for small 40- to 50-pound bales would be from $4 to $5. It is $7 per bale now, Dorsett said. Also, Boleman said, the price for large round bales was $75 to $85 per ton; it is now $125 to $185 per ton because of added transportation costs.
If the drought continues, Boleman said, ranchers also may face the additional expense of buying or hauling water to keep animals alive. As stock ponds dry up, ranchers face the additional safety concern of cows getting bogged down in surrounding mud.
Shorter bouts of pestilence -- things such as grasshoppers or disease can be dealt with, Boleman said. There is little ranchers can do about the drought except buy more feed just to keep cattle going, he added.
Tom Stewman of Maryneal, a purebred Limousin cattle producer attending this year's short course, said the 1998 drought has gotten worse than anyone thought. Dry, hot weather, bad cattle prices, dismal oil prices and poor row crops in the area have added up to a gloomy picture.
"We're in a depression out in West Texas," he said. "The money lenders are getting real concerned."
If his area does not receive rain soon, Stewman said, "we'll have to sell out and there will be lots of people going broke. There will be lots of real estate on the market."
John Dudley of Comanche, a purebred cattle producer and second vice president of the Texas and Southwestern Cattle Raisers Association, said ranchers he has talked to are still retaining their optimism. They are hoping it will begin raining again in the fall, just as it did in 1996. "To stay in the cattle business, you have to be an eternal optimist," Dudley said.
Producers are concerned about how they will manage cattle through the fall and winter if they do not get rain. They also are beginning to have problems with stock tanks drying up, he said. The drought of 1998 came too soon, he said.
"The drought of 96 was a killer. Ranchers haven't had time to heal up, get money in the bank and get debts paid off. It's going to really work a hardship for some people."
Davis, the economist, said the drought will impact consumers very little. In the short run, it will increase the number of cattle going to market, depressing prices.
"However, it takes nearly a year of prices being lower (at that level) for the savings to be passed to the consumer," he said. Eventually, because of the drought and market trends in other parts of the country, cattle supplies will be tighter, possibly driving prices up, he added.
One of the biggest impacts to the general public, Dorsett said, is to people who keep one or two horses in the country. With hay prices up, these people will be looking for alternative feed. He cautioned them to remember that all animals need fiber that hay normally would provide. Some substitutes could include cottonseed meal or rice hulls, he said.
Boleman expects it will take at least two or three years for ranchers to recover from the drought. Ranchers have lost potential income from the cows they have culled because they have lost the future reproductive capacity of those cows, decreasing next year's cash flow.
If ranchers stay in business, they eventually will have to buy $600 or $800 replacement cows for cows they sold at perhaps $250 to $350, Boleman said. Even the cattle that producers keep -- creating a higher-than-normal feed bill -- will be in poorer condition because of the drought and probably will not reproduce as well in the future.
"I speculate it's going to take our very best producers a minimum of 24 months to actually get back into a situation where they are restocked and they have their normal cash flow," he said. "That's exclusive of their losses and expenses in getting back to that point."
For other producers, it may take 30-36 months, he said.
Additionally, many producers have lost years of genetics they have built into their herds.
"That's a much greater loss than a commercial cow selling for $300 and replacing her at $600. These people may have thousands of dollars in genetics. They may feel the cow they are selling at $300 is worth $2,000."
Wayne Hamilton, director of the Center for Grazingland and Ranch Management at Texas A&M University, said he is doubtful that some of the state's rangeland will recover from the drought. About 71 percent of the state is either improved pasture or rangeland.
As of Aug. 1, he said, an estimated 97 percent of the state's rangeland was reported to be in fair to very poor condition, making it difficult or impossible for livestock and wildlife to survive without supplemental feed.
Hamilton cited studies from the Texas Agricultural Experiment Station near Sonora that showed significant declines in rangeland production during the droughts of the 1930s and 1950s. Moreover, some rangelands weren't able to reach pre-drought production levels even after it began raining again, he said.
Severe droughts, along with overgrazing, caused permanent changes in a region's vegetation, Hamilton said. The vegetation that moves in is that which can survive more arid, stressful conditions, he said.
ANSC TOP