Ranchers Diverse in Their Drought Management Strategies
Portions of the western U.S. are experiencing the worst drought in 80 years (Piechota et al. 2004). Figure 1 indicates that Wyoming has experienced multiple periods where precipitation was below normal for consecutive years, with the most recent period being between 2000 and 2005. Average annual precipitation has been trending downward since 1895 when official records were kept. Moreover, research suggests that drier summers could become more common as the global climate changes (Hengeveld 2000). The most recent period of drought has reduced range productivity, lowered irrigation water supplies and ultimately forced some ranchers to reduce herd sizes. Many producers culled their herds at a time when cattle prices were below the cyclic peak (between the years of 2000 to 2004), resulting in lower sales revenue. They also incurred higher feed costs to maintain the remaining herd. Together, these factors contribute to reduced profitability. Additionally, breeding livestock purchased now to restock drought liquidated herds would be done so at or near the peak of the most recent cattle price cycle. Current forecasts suggest that cattle prices are likely to start their cyclical decline within the next two years (Livestock Marketing Information Center 2006). Livestock purchased now or in the next several years would likely generate negative returns throughout their productive life, even if a ranch had the available feed resources, causing restocking to be less desirable at this time (O’Neill et al. 1998). The economic consequences of restocking at this point in time coupled with smaller herd sizes from drought liquidation puts ranchers in a weaker financial position to survive the downside of this most recent price cycle. The combined effect of these events has concerned many ranchers, and they are turning to professionals from land grant universities and elsewhere for help or they are selling off their ranches altogether.
Bastian, Christopher T.; Mooney, Sian; Nagler, Amy M.; Hewlett, John P.; Paisley, Steven I.; Smith, Michael A.; Frasier, W. Marshall; and Umberger, Wendy J.. (2006). "Ranchers Diverse in Their Drought Management Strategies". Western Economics Forum, 5(2), 1-8.