Livestock sell-offs sting feedlots across drought-stricken area

2/1/2013

By AMY BICKEL

By AMY BICKEL

Special to The Telegram

ASHLAND — This is cattle country, Charles McKinney says — a region along the southwest Kansas border where his great-grandparents first settled.

It's here, in the middle of the Gyp Hills' rugged red buttes and miles of grassland, that McKinney and his family have made a living.

But the grassland here has been sucked dry from three years of little moisture. Weeds are taking the place of the once-lush stands of grass. The area's water supply has dried up, too — streams and ponds that had plenty of water when McKinney's ancestors settled here in the mid-1880s.

The situation is dire enough that the Clark County cow/calf producer has been selling off his cattle, his herd down to 80 percent of what it was when the drought started in 2010.

"We're down to pretty near nothing," McKinney said. "We just have a few cows and bred heifers. We don't have any grass."

The prolonged lack of moisture across much of the nation has crippled America's ranchland. The drought also has hit crops and feed sources, which have caused prices to more than double.

As a result, ranchers like McKinney are selling off their livestock in an effort to survive. The U.S. cattle herd has shrunk to 90.8 million head, the smallest since 1952, according to the National Agricultural Statistics Service.

Meanwhile, it seems ranchers' feeding woes will continue, with the USDA reducing its estimates for corn amounts. Kansas State University economists estimate that feed prices will stay high through at least early summer.

McKinney said he supplemented his remaining herd with hay and range cake, noting he paid $250 for round bales of alfalfa.

"That is twice what I have ever paid before," he said, adding that producers "have cut back considerably in Clark County. "It just costs too much to keep them."

Low cattle numbers are nothing new, but the drought has exacerbated the problem, which is now trickling down to Kansas' sparsely populated feedlots.

Hays Feeders announced late last year it would temporarily close its northwest Kansas feedlot after the multiyear drought, which has brought herd liquidation and high grain prices. That caused "over-capacity in the cattle-feeding sector," Jerry Bohn, general manager of Pratt Feeders, which owns the Hays operation, said last fall.

Cargill Meat Solutions' Plainview, Texas, plant is the latest casualty. Cargill officials revealed this month that they plan to close the packing plant Feb. 1. It could be a few years before it reopens.

"The U.S. cattle herd is at its lowest level since 1952," John Keating, president of the Wichita-based operation, said in a news release. "Unfortunately, the drought has not broken, feed costs remain higher than historical averages, and the herd continues to shrink."

While plants like Cargill's Dodge City venue will take in Plainview's cattle, helping align the industry, more pain is in the forecast for feedlot operators. Economists like K-State's Glynn Tonsor said more closings are expected.

"We have excess concrete bunk space at the feedlot level," he said. "And if it does remain dry, the current situation is not going to improve."

But even with rain, things could get worse before they get better, Tonsor added, noting that when it does finally rain, producers will save back cattle to rebuild their herds rather than ship them to feedlots.

Industry signals show cattle numbers won't recover soon. The nation's calf crop is estimated at 2 percent lower than a year ago. Also, cattle and calves awaiting slaughter in U.S. feedlots of more than a thousand-head capacity totaled 11.2 million head Jan. 1 — down 6 percent from Jan. 1, 2012.

In Kansas, the number of cattle on feed Jan. 1 was 2.11 million, also down 6 percent. Meanwhile, cattle inventory is down more than 11 percent since the drought started in 2010.

Declining cattle numbers have been occurring for a few decades, said Kevin Good, a senior market analyst with Colorado-based CattleFax. Cattle numbers have declined 15 of the past 17 years, and he estimated that most feed yards are averaging at least 25 percent or more in unoccupied bunk space.

"We have access capacity," he said. "We either idle capacity by mothballing feed yards or utilize those feed yards in different ways."

Back in cattle country, Mike Betschart worked cattle on the operation belonging to his parents, Frantz and Ellen Betschart, near Ashland on a sunny day last week.

Mike Betschart, a cattle buyer, confided it was getting tougher to find cattle to buy and sell for individual producers and for feedlots.

"Our calf factory is going down," he said.

Grass and water are in short supply, Betschart said. Even his parents have cut back.

"There are a lot of places that rely on windmills and lot of places that rely on pond water for cows. Some people might have grass but don't have enough pond water for them," he said.

As soon as nature cooperates, the industry will again expand, Betschart said. But when that will be is anyone's guess. Little snow has fallen this winter, and the outlook this spring doesn't appear to include clouds. The National Weather Service's Climate Prediction Center forecasts the drought to linger through at least April across much of the American west.

About 70 percent of the nation is still suffering from a drought. Kansas is in the heart of it all, with 100 percent of the state in severe to exceptional conditions.

"It won't take just a rain," Betschart said. "It will take a considerable amount of rain for a prolonged period."

The weather patterns will change again, he said.

"It is just part of things that happen in nature," he said. "We've been through droughts before, and they always last longer than we want. Eventually it will end."

Then, he added, "You just have to be optimistic enough and tough enough to stay with it."

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