Economics of Drought Management in Livestock

Agricultural Disaster Preparedness and Recovery, Drought Resources November 10, 2016 Print Friendly and PDF

Grass fed beef. Photo taken by F Delventhal and used under CC 2.0

Drought affects ranches directly in terms of the amount of forage produced and water availability for livestock. Lost forage production is the most critical aspect.

Northern States

In the northern part of the United States where ranchers face distinct growing seasons, production usually occurs in the spring and into the early summer followed by a more dormant period. Regrowth may occur again in the fall when rains return and before temperatures drop too much. Spring growth is affected by precipitation that occurs over the winter as well as current precipitation. Drought at any of these times may have an impact on overall production.

Southern States

In the southern part of the United States, vegetation growth may occur at any time of the year when temperatures are high enough and precipitation occurs. Drought at any time of the year will have an impact on production.

Lost Forage

From an economic standpoint, drought for northern states and southern states causes vegetation production to go down.

The ranch is faced with few options:

  1. Continue to graze the same number of animals and hope the drought breaks
  2. Reduce the herd size to match the amount of forage produced
  3. Seek additional forage sources,  ( or )
  4. Feed hay or other harvested feed. See more about how to plan and manage for drought on rangelands.

Each of these options will affect the ranch economically, but in different ways. Continuing with the same numbers will cause the rangelands to be overgrazed and will eventually result in reduced animal production either in weight gained or in reproductive rates.

Reducing the herd can increase short-term income from the sale of livestock but at the same time reduces future income due to fewer calves or lambs being produced. Also, as the herd gets built back up when the drought ends, more replacement animals will be retained, further reducing income. The secondary effect is that if many ranchers seek to reduce their herds at the same time, it is likely that the market price for their animals will be reduced as well.

Seeking additional forage sources through avenues such as private land leases or through feeding hay are generally costly options. As with livestock sales at this time, if everyone is seeking private land leases or to buy hay, prices of those will increase.

Besides these direct costs to the ranch, there are likely to be some intangible costs. Many ranches seek to retain livestock that is suited to their particular landscape and resources. If the ranch has to sell those livestock to match forage availability, the loss of those livestock may have a longer-term impact on what the ranch can produce.

Photo: krossbow / Foter / CC BY

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.