Cattle producers in Western Colorado may need a red-tipped white cane and a guide dog to see them through the next two years.
The year of COVID-19, a yo-yo ride with China exports, processor uncertainty, head-spinning pricing, the rising reality of a drought devastating rangelands, and the need to fight off swarms of animal rights attacks, not the least of which is the Initiative 16, aimed at terminating livestock husbandry, leaves the typical meat producers gasping for breath and fighting for his/her life.
While demand is up well over last year and prices are climbing, Colorado ranchers face some uncertain times. Consumers will be facing higher prices, especially in the food service industry. Packers say there is plenty of beef in the pipeline. But demand is raising numbers. Last year a tenderloin was selling at about $8 a pound. The uptick in wholesale prices has the same cut now selling for double that. One would think this is good medicine for cattle producers. But other factors are at work. One is the lack of water.
At first, Janie Van Winkle, a Western Slope native, rancher, and president of the Colorado Cattlemen’s Association, says it looked like some normal cattle business cycles with a drought thrown in for good measure. Then more shoes dropped.
“The hard part is that you work to get numbers to a sustainable place (economically), and this happens (environmentally). It is an ongoing cycle that we all struggle with and it has been that way for years. Having a drought management plan is critical for producers to weather these kinds of events over and over and (even) then it is quite a challenge. Some don’t make it,” she says.
The Forest Service and BLM managers are presently looking at dropping permit carrying numbers by as much as 20 to 40%. For a permit allowing, say 15 cows per section, that is a call for serious herd culling.
“I would say we will sell an additional 50-70 cows this year,” says Van Winkle. “Many producers will have to sell, as it is not cost effective to feed hay to the rest. The saying goes that you cannot feed your way out of a drought.”
Daris Jutten, a member of the Uncompahgre Water Users Association board looks at the situation from a water manager and rancher perspective.
“I think it (the cattle count) has to be going down. The whole west is in a serious drought,” he says. On the numbers, Jutten sees maybe 30% less turned out to grass (turned onto summer range) in the west, as a whole.”
Van Winkle, whose cows drink water from the creeks that run off the Grand Mesa, backs up the drought talk and says, “They are absolutely down. One of the water managers said last week that normally he would be seeing 15 (cubic feet per second) of water right now. There are 3 feet in one of the creeks.”
Both Drovers and Cattlefax, the data keepers for the cow business, see herd counts going down. Increasing feed costs and drought issues are the drivers.
John Nalivka, a longtime observer and columnist for Drovers says, “The beef market has definitely supported beef exports, but at the same time, significantly increased corn and soybean exports to China as they rebuild their hog herd, have pushed feed costs sharply higher. We are now back to basic feedlot economics – high grain prices and rising breakeven prices are offset by lower feeder cattle bids. That is simply managing 70% of the cost.”
Cattlemen like Jutten and many others on the Western Slope grow a lot of feed but when fuel cost goes up, and water becomes hard to come by, growing your own is not much help. Culling is one of few options open.
“Beef cow slaughter through mid-April is up 4% over a year earlier and highest to-date since 2010. Notably, for the same period last year, beef cow slaughter was up 7% over the prior year. That is pretty deep herd culling!” Nalivka wrote this week.
Kurt Sanburg, longtime Bostwick Park operator, says about the moisture, “We haven’t received a 10th of an inch yet but it’s drizzling (on Monday this week). I will be reducing our number of cows pretty significantly. I will drop the cow count by as much as 25%,” he says.
Meanwhile, another Sanburg, Hugh, who ranches a lot of the southern slope of the Grand Mesa, is looking at down numbers as are his neighbors. “There have (already) been some reductions around here due to the drought conditions. I don’t have a crystal ball, but if the severe drought conditions persist through the summer, I would expect to see more movement of cattle within the drought affected areas.”
Sanburg is referring to moving cattle off the range, in other words culling. All the while, praying for rain.
Delta County producer Robbie LeValley says that they will heavily cull this year. “I have listened to others and it sounds like most will do the same,” she says.
Colorado fed cattle prices bottomed out in July of last year at about $91/cwt. The prices have been up and down and up again until April 22, when they hit $123. But, with costs continuing to go up and range capacity falling, marginal producers will be looking at slim times. That is a sad thing to report considering the rocket ride that whole beef prices are on as restaurant ramps up from the Covid-19 crater of last year.
The slaughter count on all beef is hovering in the high range, although below the peak last year that occurred just before the drastic tumble when the COVID and packer crises hit.