Economic Tidbits

Will the Drought Persist?

The drought map beginning 2023 looks much more ominous compared to a year ago (Figure 3). Presently, 100 percent of Nebraska is under some form of drought. Last year at this time 35 percent was under some form of drought. This year, 45 percent of the state is categorized as under either extreme or exceptional drought. Last year just 3 percent was categorized as such. According to the January 3 USDA Crop Progress Report, 83 percent of subsoil moisture supplies in the state were rated either short or very short.

Figure 3. Nebraska Drought Monitor

December 30, 2021

January 12, 2023

Source: The National Drought Mitigation Center, UNL

The persistence of drought could have many repercussions for the state’s producers in 2023. Many cattle producers were forced to reduce the size of their herds last year due to drought impacts. University of Nebraska Agricultural Economist Elliott Dennis reports heifer placement in feedlots is nearly 40 percent, the highest since 2002. This means fewer calves born in 2023 and fewer feeder cattle moving into feedlots. Additionally, the feeding sector will face higher feed and feeder prices pinching returns. Crop producers face tough decisions regarding planting intentions, seeding rates, and input application rates not knowing whether the drought will continue. Irrigated producers could face increased costs and possible restrictions on pumping.

Recent rains and snows have helped, but more precipitation is needed to break the drought. Regardless, the drought has already and will continue to add to the complexity facing producers in 2023.

You may also like