Economic Tidbits

Impacts of Drought—Cattle . . .

Last week’s USDA crop progress report showed 78 percent of pasture and range acres in Nebraska were rated “poor” or “very poor” (Figure 2). Alfalfa production in Nebraska is projected to be down 35 percent this year compared to last year. And other hay production (excluding alfalfa) is expected to be off 6 percent compared to 2021. Less forage production means higher forage prices. In addition, the cost of other feedstocks like corn and distillers grains have risen too. These impacts—less forage production, stressed pastures, and higher feed costs—stem largely from the drought.

Figure 2. Nebraska Pasture Conditions Rated Poor/Very Poor

                Source: NEFB graphic based on USDA NASS data

This year’s drought means cow/calf producers face the decision of whether to keep the herd intact and pay higher feed costs or liquidate cows and reduce herd size to reduce costs. Nebraska’s beef cow herd was already shrinking prior to the onset of the drought. The latest survey from Jan. 1 estimated the herd size at 1.8 million head, down 3 percent from 2021. This year’s cow slaughter numbers indicate a further liquidation of the herd is occurring. The average weekly beef cow slaughter for region 7 (Nebraska; Iowa; Missouri; Kansas) through August was 34 percent higher compared to the same period last year. Prices for cull cows are higher this year which could be contributing to the higher slaughter numbers, but the drought is likely playing the larger role.

The economics for the cow/calf producer were already under strain coming into the year and the drought has only made it worse. And, because of the life cycle of a cattle herd, decisions made this year affect herd production in years to come. Thus, the impacts of this year’s drought on cow/calf producers could linger for many years.

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