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Sunday, Aug. 2, 1998
Drought forces cattle selloff
Lack of rain, feed could cost Coastal Bend $120 million
By JEFFREY TOMICH
Staff WriterALICE - The layer of dust on pickups and trailers at the South Texas Livestock Co. in Alice was evidence of why Tuesday's livestock auction lasted longer than usual.
Harsh conditions, brought on by four months without significant rainfall, are forcing many South Texas cattlemen to make a tough decision: Sell cattle now while prices are decent or wait for rain and risk higher feed costs and the threat of greater losses.
That's the No. 1 concern for 70-year-old rancher Gene Villareal, who showed up at Tuesday's auction not to unload cattle, but to see what prices his might fetch if the dry spell continues.
He and other longtime ranchers in South Texas are living proof that no amount of experience managing cattle can overcome four months without rainfall.
``It's putting a lot of pressure on us, but we're doing the best we can,'' said Villareal, who learned ranching from his father in the Rio Grande Valley. ``If we don't get any rain within a couple of weeks, we're going to have to liquidate.''
Industry experts estimate Coastal Bend ranchers may sell off as much as 8 percent of their herds by year's end, about the same percentage sold off during the 1996 drought.
Losses in ranching in the 18-county area could run as high as $120 million, half of it from increased feed costs due to the dried-up rangeland.
This year's drought may not be a blow of the same magnitude as the one in 1996, partly because many ranchers haven't replaced the cattle they sold two years ago. However, if the drought continues it could force loan defaults, ownership changes in ranching operations and producers permanently leaving the industry, said Steve Munday, executive vice president of the Fort Worth-based Texas and Southwestern Cattle Raisers Association.
Villareal, a retired school principal from Corpus Christi, has 250 mother cows and almost that many calves spread among ranches near Mathis, Alice and Premont. With blazing temperatures and not a trace of rain, he foresees having to sell at least 100 calves to save on feed.
``I would say the pastures are the worst I've seen them in two years,'' he said. ``We're feeding grain stubble to the cattle, which is not the greatest. When that stubble is gone, we're going to be in trouble.''
Hanging on to the herd
Like many cattle raisers across Texas, the 1996 drought forced Villareal to trim his herd considerably. He sold almost 40 percent of his cattle then and didn't have time to re-stock completely before the skies dried up again in mid-March.
``We rebuilt last year because of the rain and here we are again,'' he said.
Villareal continues looking ahead, hoping Mother Nature will allow him to hang on to the core of his herd. ``We're keeping a bunch of heifers to build it up, to help bring the herd back. The problem is you bring the herd back and then you have to sell them.''
Much of the livestock paraded before buyers at the Alice auction Tuesday were young calves that normally would be sold a few months from now, said Brent Heilman, manager of the South Texas Livestock Co.
``What you're seeing now is cattle you'd be selling in October,'' he said. ``This fall, we won't be running the same volume of cattle we normally would.''
Bad weather, better market
About 900 head of cattle were sold at last week's auction compared with 500 or 600 sold in late July during a normal year, Heilman said.
Overall, volume is up 25 percent to 30 percent compared with a year ago, he said. Other livestock auctions in the state are reporting double the number of cattle usually sold during this time of year, according to the Texas Agricultural Extension Service.
In Bee County, more than 1,900 head of cattle were delivered to the Beeville Livestock Commission for its Friday auction, said office manager Laurie Lee.
That's up from 1,050 head sold the past two weeks and 1,500 the week of July 10, she said.
Normally, Lee said, the auction would draw 800 to 900 head of cattle at the most this time of year.
Unlike 1996, when the triple whammy of the drought, a depressed market and sky-high feed costs produced a panicked frenzy among ranchers looking to sell cattle, ranchers today are only just starting to trim the size of their herds.
``This year, the weather's probably worse, but the market's better and the feed prices are better,'' Heilman said.
Slow rebuilding process
Another reason why ranchers don't face the same losses as in 1996 is partly that they haven't fully recovered from that year's agricultural disaster.
According to the extension service, the number of mother cows in the 18-county Coastal Bend region dropped 8 percent to 689,000 from 752,000 between Jan. 1, 1996 and Jan. 1, 1997. Ranchers rebuilt herds last year by less than 1 percent. This year, industry experts predict another selloff of as much as 53,000 cows, which almost would be another 8 percent drop.
Because of the 1996 drought, Live Oak County rancher Ernest A. Bolland has 25 percent fewer cattle than roamed his rangeland between Beeville and George West a few years ago.
He plans on selling some young calves this year, too, to hold down feeding costs for his 200 mother cows, but doesn't anticipate the same type of selloff he and other ranchers experienced two years ago.
``I will do the normal culling, but I'm not that heavily stocked because of the '96 drought,'' he said.
Cheap feed
Involved in the cattle business since he was a boy, Bolland lives on and ranches the same acreage where he grew up and maintains the same pasture his father did.
He's witnessed a few dry years in his lifetime, and fears that the 1990s are beginning to resemble the 1950s -- a decade that produced a drought so severe many producers were forced to sell as much as half of their herds.
This year, Bolland has already moved cattle to fresh pastures and he's using leftover bales of milo stubble as cheap feed. He's doing all he can to hang on to the nucleus of the Beefmaster line his father brought to the ranch in 1943.
``For me, they're very efficient cattle and I don't want to sell them unless I have to,'' he said.
Bolland likely has a large enough hay supply to outlast the drought, but he isn't taking any chances.
``I will have enough resources to probably carry me through the year,'' he said. ``But I would rather have an excessive number of bales than run short. It's a matter of self-preservation.''
Bolland, who also farms corn, milo and cotton, also will use cotton seed as an inexpensive source of feed after his cotton crop is ginned to prevent him from having to sell cattle.
Coastal Bend's costs
Ernest Davis, a professor and extension economist for Texas A&M University, said the 1998 drought hasn't been as hard on ranchers because of the selloffs two years ago. By contrast, the 1996 drought hit at the peak of a market cycle, when the inventory of cattle was at a high point.
``We're not as bad as we were in 1996 because we're not as intensively stocked,'' Davis said. ``In 1996 we were at the peak of the cycle. There was a little recovery in '97, but that didn't pay all the bills.''
Davis said cattlemen in South and East Texas have been hardest hit so far this year, but the drought has begun taking a toll on other areas of the state.
Larry Falconer, an economist for the extension service in Corpus Christi, says the combined effects of the drought could cost the Coastal Bend ranching industry a combined $120 million.
The region includes Bee, Colorado, Dewitt, Fayette, Goliad, Karnes, Lavaca, Austin, Washington, Aransas, Refugio, Nueces, San Patricio, Calhoun, Jackson, Matagorda, Victoria and Wharton counties.
Of the projected losses, $60 million is tied to the increased cost of buying feed because pastures have been eaten bare; $18.4 million is associated with the selloff of livestock; and $38 million is from loss of hay production, Falconer said.
Cattle prices falling
Falconer's projections don't take into account the loss associated with the premature sale of calves, which are being taken to auction to lessen the cost of feeding mother cows.
Falconer estimates ranchers are having to spend about 76 cents a day on average to feed their cattle. Across the Coastal Bend, that comes to about $30 million for the months of June and July.
Feed costs are rising, but haven't reached the peak they hit in 1996, when high corn prices were putting even more pressure on cattlemen. Hay prices are also rising as it becomes harder to find.
Cattle prices are depressed, but also not as bad as they were in 1996.
On average, calf prices of 67.5 cents to 78 cents a pound are off from about $1 a pound in April, he said.
``For a good young to middle-aged cow, they were selling in the spring for $600 to $650,'' Falconer said. ``If you take that same cow now, in somewhat of an emaciated state, it's probably not going to be worth more than $300.''
Cow prices are down, too, but not as much, he said.
Whole economy affected
While the 1998 drought hasn't reached 1996 proportions, it could if the dry conditions continue through August and into September.
``We have the potential to be on the same pace we were with the '96 drought,'' Falconer said. ``We're not quite there yet.''
Still, it will affect the area economy, Falconer said, by lessening the demand for agricultural equipment and stress on lending institutions. It could also affect tax bases for rural school districts that rely on property values.
``Most of the money agriculture generates is spent locally,'' he said.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web