Farm Talk

Area Farm & Ranch News

October 2, 2012

Drought takes $128 million bite out of Arkansas beef cattle industry

(Continued)

Parsons, Kansas —

•The difference between the purchase and sale price is a function of transportation cost, but should not be used as an estimate of transport cost in this case, because sellers may ship to different markets than where a buyer is obtaining his or her product.

•Calf sales. Producers sustained losses from calf sales in two ways: Weaning early as a result of reduced available forage, and fewer calves, because herd size has decreased given lack of feed in the drought year.

Wider Impact

The researchers said additional costs incurred by producers that were not quantifiable from the survey included supplemental feed, transport and purchase of drinking water, and replacement costs incurred when restocking the herd. “These costs vary from farm to farm and can be a significant expense to cow-calf producers,” Popp said.

Popp said the drought has also prompted producers to change their herd management. The survey found:

•73 percent would sell their calves earlier than in a typical year

•49 percent had reduced their herd size by selling more mature cows than usual

•41 percent planned to sell more mature cows this fall

•41 percent sold replacement heifers that would otherwise replace mature cows

•30 percent said they would sell more replacement heifers this fall

Other production changes included:

•40 percent said they would apply more weed control to allow grasses on pastures to recover better than if weeds were competing.

•Three percent said they would sell all their livestock

•76 percent were feeding extra hay and supplements

•18 percent were bringing in water from off-farm sources

“Longer term cow-calf producer economic losses attributed to the drought, such as pasture recovery, increased breeding failures, reduced heard body condition scores and the impact on agricultural input industries will take additional time to quantify,” Popp said.

Analyses of those longer term effects are subject to ongoing studies.

Ripple Effect

The $128 million in cow-calf losses also ripple into other industries, according to of the University of Ark-ansas system Division of Agriculture.

“The health and social services industry experienced the most income and value added losses due to induced impacts,” Kemper said. Those were followed by retail trade, finance and insurance, wholesale trade real estate and rental.

“When cow-calf farmers lose income, that translates into fewer dollars being spent back into the local economy buying groceries and clothes and eating in local restaurants. It also means fewer trips to the doctor and dentist for those farm families,” he said. Kemper calculated the total loss in labor income to those other industries at $4.4 million. Value added losses were pegged at $8.1 million. “In rural communities where the cow-calf sector makes up an important part of local economic activity, the impacts to main street businesses are substantial.”

Methodology

During the month of August, surveys were distributed to cow-calf producers who attended drought-production tactics meetings in Hot Springs, Harrison and Quitman, emailed to 971 producers through an Animal Science list and another 916 producers on file with the state Department of Agriculture. Researchers received 545 responses from producers in 58 counties. The study results are from 406 usable responses—those where all the questions were answered—and the operations encompassed by those surveys accounted for nearly 23,000 bred cows, or approximately 2.5 percent of the cow-calf industry.

The studies are available online at: www.uaex.edu/de pts/ag_economics/publica tions/Ark_Drought_Re port_Comm_Beef_Septem ber2012.pdf and www.ua ex.edu/depts/ag_econom ics/publications/Ark_Drought_Report_CowCalf_Septem ber2012.pdf

For more information about cattle production or risk management, visit www.uaex.edu or contact your county extension office.

The Cooperative Extension Service is part of the University of Arkansas System Division of Agriculture and offers its programs to all eligible persons regardless of race, color, national origin, religion, gender, age, disability, marital or veteran status, or any other legally protected status, and is an Affirmative Action/Equal Opportunity Employer. £

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