Whenever drought occurs, the effects on cattle and land can be far reaching in terms of economic loss to your ranch’s bottom line. That’s why having an early drought management plan in place will provide more flexibility and assist in revenue protection for your operation as you navigate the changing seasons.
Read on for some insights . . .
How Drought Causes Financial Loss
Most drought-related financial losses stem from a combination of factors related to poor livestock performance and the need to source alternative feed. That said, the later you make management decisions, the more profound and difficult your operation’s recovery is likely to be.
Whenever there’s a lack of adequate, quality forage, the resulting decreased nutrient availability leads to cows with a decreased body condition score (BCS) and poor milk production. In turn, calf weaning weights and cow rebreeding rates typically decline. Additionally, if you need to purchase supplemental feed or lease additional pasture for grazing, the associated freight costs can outweigh the benefits—as fuel has been a large expenditure in recent years.
Besides the indirect losses from poor herd performance, deciding to destock and sell off a portion of the herd often results in lower sale proceeds due to poor market timing. Allowing cattle to graze drought-stricken land also introduces long-term strain on forage resources. These combined decisions can put you in a position where you need to restock during times of higher cow prices and stock your herd on forage that’s lower in nutritional value.
Management Practices for Revenue Protection During Drought
Although drought conditions are stressful financially and emotionally for most ranchers, there are a number of things you can do to lessen the impacts it has on your operation, such as the following:
- Supplement cattle to maintain BCS. The feed sources you choose will vary widely in cost, especially when hay is in high demand. This option should be evaluated closely before making purchase decisions.
- Wean calves earlier. Separating cow-calf pairs at around 120 days not only alleviates the forage that would be consumed by growing calves, but it also alleviates the higher nutritional needs of lactating cows. There will be a loss of revenue, but payback will likely come through better range conditions, less supplementation, and better future pregnancy performance from better-maintained BCS.
- Destock only during normal culling times. By routinely culling in the spring, you will likely see higher profits than you would if you culled later in the year when the market is flooded. This practice also reduces your expenditures if prolonged drought forces you to provide supplement feed.
- Set forage aside or save cash to buy forage. If you need to remove cattle from pasture earlier than anticipated or you need to rent grazing land, having resources in reserve beforehand can ease immediate supply and cash flow concerns.
- Reduce stocking rates as needed. This action will benefit range plants by reducing stress and providing more forage for remaining cattle. When stocking rates are reduced, only small effects on weaning weights may be noted. If you don’t choose to reduce stocking rates, then supplemental feeding will become necessary to maintain herd productivity and alleviate grazing pressure.
- Purchase Pasture, Rangeland, and Forage (PRF) insurance. PRF doesn’t insure against catastrophic periods of drought specifically, but it protects your operation when rainfall on your land is lower than historic averages in your area. Planning a season ahead and securing a PRF policy can protect against losses incurred with planted forage and grazing crops, providing a blanket of financial protection for your operation and your family.
Forward Planning for Your Ranch and Pasture Land
Redd Summit Advisors provides PRF insurance, LRP insurance, tools, and education to help ranchers and landowners ease the adversity involved in operating a profitable livestock operation. As trusted partners, we want your operation to be successful now and for generations to come. Please contact us any time with questions about our products or if you’d like to discuss risk management for your operation.