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Drought Taking Billion-Dollar Toll

Article-Drought Taking Billion-Dollar Toll

Estimated drought losses for Texas have reached $4.1 billion, eclipsing the $2.1-billion mark set in 1998, according to Texas Cooperative Extension economists.

"Three-fourths of the land in range and pasture is too dry to produce much grazing or hay that's harvestable. Without rain soon, livestock herds will face further liquidation," says Carl Anderson, Texas A&M University (TAMU) Extension economist and professor emeritus, in a recent edition of TAMU's AgNews publication.

Anderson says rising hay and supplemental feed costs are forcing many ranchers to liquidate herds, while lack of water has forced some to sell out completely. He explains "Cattle sales are up sharply from a year ago. The reduction in herd size will curtail beef supplies for several years.The lack of adequate nutrition for cows also means a smaller calf crop next year."

What's more, according to TAMU analysts, ag lenders are reporting fewer loan repayments and greater demand for loan renewals and extensions from a year ago, according to the Federal Reserve Bank's Second Quarter 2006 "Survey of Ag Credit Conditions." Producers are collecting insurance based on individual coverage on dryland crops, and many cow-calf operators have taken out larger loans because of higher feed costs.

"Others have sold their herds due to limited water and forage," Anderson says. "High energy prices have substantially increased production costs to further stress an already depressed production environment. Some crop and cow-calf operators can't financially withstand more losses and will be forced to seek other jobs or business alternatives."

All told, estimated drought losses for Texas have reached $4.1 billion, eclipsing the $2.1-billion mark set in 1998, according to Texas Cooperative Extension economists.

Crop losses are estimated at $2.5 billion and livestock $1.6 billion, the report says. The current drought equals the multi-year dry period of the 1950s, and could go down as the worst ever if substantial rainfall isn't received by the end of the year, say Extension officials.

"Most of North Texas, East Texas and the Coastal Bend were in various stages of drought since May of last year, and hay supplies were depleted maintaining livestock over the summer and winter," says Travis Miller, TAMU Extension agronomist. "Much of the corn and soybean crops have been harvested for silage or hay; pastures are bare and hay barns are empty. Much of the hay being fed is from out-of-state or along the upper coast, which has received favorable rains. Livestock water supplies are disappearing and ranchers are unable to sustain herds with purchased hay and dry tanks."

The driest regions in Texas are the Panhandle, Southern High Plains and Rolling Plains, Northeast Texas and the Lower Rio Grande Valley.

Beyond the Lone Star State, Derrell Peel, Oklahoma State University Extension livestock marketing specialist, reports: "Emerging market data continues to confirm the significant impacts drought is having on cattle numbers in Oklahoma. Feeder cattle marketed in the eight federally reported auctions in Oklahoma are up 6.1% for the year to date compared to 2005. Since July 1, feeder marketings have been up by more than 65,000 head. This despite the fact that the Jan. 1 estimated feeder supply in Oklahoma was down by 30,000 head. Clearly the increased summer marketings are mostly early movement of 2006 calves rather than yearling stockers."

Peel goes on to explain, "This pattern has been confirmed in the last Cattle on Feed report which indicated a large increase in July placements compared to last year, with the largest increase in the cattle under 600-lbs. category. Given the Oklahoma numbers it appears August feedlot placements could follow a similar pattern.

"These changes in the timing of cattle marketings suggest several implications for the remainder of 2006. First, fall runs of weaned calves should be smaller than previously expected. Second, should we manage to get some wheat pasture, there will be a smaller supply of stocker calves available to fill wheat pasture. Third, feeder supplies will stay tight for the rest of the year and into 2007, especially if we should be able to establish some winter grazing on wheat," he says.

You can find the complete TAMU report at