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There Is No Easy Recovery For Southwest BeefThere Is No Easy Recovery For Southwest Beef

It’s a long road to recovery for the Southwest cattle industry, even if the summer rains are substantial.

January 20, 2012

5 Min Read
There Is No Easy Recovery For Southwest Beef

“Historically tough times” – that’s how some livestock experts sum up the 2011 Southwest livestock industry. One of the worst droughts on record has forced many livestock producers to cull herds, turn to out-of-state forage sources and, in many cases, scramble for adequate water supplies just to keep their herds alive.

And in spite of rain in late December and January in Texas, Oklahoma and New Mexico, the forecast is calling for extended dry conditions and a long road to recovery, even if substantial rainfall comes this summer season.

“The drought is the last in a series of events that have hurt the industry,” says Derrell Peel, Oklahoma State University Extension livestock marketing specialist. “The timing of the drought couldn’t have been worse. But we didn’t get into this predicament overnight, and we’re not going to get out of quickly either.”

Peel says he expects recovery to take 4-5 years before herds can be significantly reestablished, and says a more patient approach will be necessary before the industry can experience expansion and return to pre-drought conditions. But he says some positive improvement could happen as early as later this year and next year depending on a number of developments, including substantial rainfall.

“It is not just a question of adding back beef cows. There aren’t enough females to support repopulation in one year. Ranchers won't run out of females, but price will get high enough to encourage producers to wait to buy them. And one of the greatest challenges we face will be redeveloping forage acreage and inventories. This isn’t going to happen overnight,” he adds. “Producers should consider a more patient recovery strategy of rebuilding cow herds over a 2-4-year period. This may be beneficial to promote optimal recovery and healing of pastures. It also will fit cattle market conditions better.”

Early estimates indicate Texas may have lost as much as 20% of its beef cattle as a result of last year’s drought, and Peel says Oklahoma losses could run that high and possibly more counting yearlings and stocker cows.

“As an industry we’ve painted ourselves into a corner,” says Stan Bevers, Texas AgriLife Extension ag economist. “We’re battered and bruised by a terrible drought and most livestock producers have reacted as you would expect, selling off cows or moving them – often great distances – to greener pastures, and buying out-of-state hay and forage.”

Bevers agrees that substantial recovery won’t happen overnight, especially considering assessment of losses is an ongoing process.

“How bad is it? No one knows for certain. We estimate some 120,000 cows won’t be marketed in Texas this year as a result of drought-related problems. Herds were culled, many cows moved out of state, including some stocker cattle, and only time will tell how great the impact on the overall industry,” Bevers adds.

He says the drought-imposed setback represents a new development in an industry that’s been losing ground for some time.

“In 1976, for example, the U.S. had about 44 million cows. But by 2011, that number had fallen to about 31 million, so the drought accelerated a trend for smaller inventories, and did so at a time when demand was steady and markets were up,” Bevers says.

Both economists say they remain optimistic that the Southwest cattle industry will recover, and that patience and innovation will be key for growers to survive. Robust strategies need to be developed and a degree of reeducation will be required for the growth of the industry in years to come.

Bevers says the 2011 drought made it tough to generate profits. However, ranchers have been through droughts before, he says, and the difference now is the additional rising input costs and market volatility. He says coming out of this drought “will require a new level of understanding and pencil pushing.”

Peel adds: “For a number of years, we’ve been teaching how to grow the industry in a grain-based environment; now, we need to learn how to produce cattle that eat less grain. Already we’re seeing a move in that direction.”

Alternative feed and forage including byproduct feeds like “cotton trash,” orange/ citrus peel and pulp, corn distillers grain, soyhulls, cottonseed and cornstalks are all viable products being tested for cattle feed and may one day replace conventional grains.

“Grain prices aren’t going to get any cheaper and production costs are going to continue to get higher; in order to survive, the industry will need to embrace new ways of doing things. But demand and a healthy market for beef is going to continue and as I have been saying to producers, patience and the ability to survive the current challenges will pay off in the long run,” Bevers says.

New strategies for cattlemen could include concentrating on stocker cattle as they slowly add back beef cows to the herd over the next few years. Plus, the market for feeder cattle is up, another area that ranchers may consider in an effort to survive the current challenges.

“I remain optimistic that recovery will happen. The only tragic variable would be another stretch of severe drought. If we don’t see rain this spring, we’ll probably see additional culling of herds by late spring and early summer. That would be a development that would complicate any hope for a substantial recovery anytime soon,” Peel concludes.

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