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HPPR Economy and Enterprise

Drought re-shaping the cattle map

Grant Gerlock/Harvest Public Media

Drought is re-shaping the beef map and raising the price of steak. Ranchers are moving herds from California to Colorado and from Texas to Nebraska seeking refuge from dry weather. And cattle producers in the Midwest are making the most of it.This year, for the first time, Nebraska passed Texas as the top cattle feeding state in the country. That is, Nebraska houses the most cattle in feedlots, which are generally the final step before they head to the slaughterhouse. It’s a turnaround brought on by a long-term decline in cattle numbers and an ongoing drought that has devastated the southern Plains. That has caused the cattle industry to look north.

Credit Grant Gerlock/Harvest Public Media
Terry Van Housen takes a handful of feed from the bunk at his feedlot near Stromsburg, Neb. Lower feed costs give Nebraska an advantage in the cattle feeding industry.

Terry Van Housen calls Nebraska the “garden spot for raising cattle.” At his feedlot near the small town of Stromsburg, Neb., 8,000 animals lined up along two miles of concrete bunks to pile on the pounds. The calves started on pastures scattered throughout the region but came to Van Housen’s feed yard for their last stop before heading for the slaughterhouse.“When the motel is full, like a feed yard or a packing plant are going full blast, that’s when they make money,” Van Housen said. “But if you can’t keep the motel full, that’s when the profits go down.”

If Nebraska’s “cattle motels” have fewer vacancies these days, it is largely because ranchers in the southern Plains have emptied out parched pastures waiting for a rainy day.

Oklahoma State University livestock marketing specialist Derrell Peel says ponds are drying up across large parts of Oklahoma and Texas.

“Western Oklahoma -- the panhandle, the panhandle of Texas and in fact much of west Texas and much of western New Mexico are still in extremely severe drought,” Peel said. “There’s been very little relief really since the fall of 2010.”

Credit Grant Gerlock/Harvest Public Media
A pile of wet distillers grains was recently unloaded at the Van Housen feedlot. The ethanol by-product is usually cheaper than corn, keeping feed costs down in the Midwest.

As a result, herds are shrinking. In Texas, feedlots, and even a Cargill packing plant, have closed because of the drought’s impact on cattle numbers. Texas, the country’s No. 1 beef state, lost 24 percent of its total beef herd from 2010-2014. Oklahoma saw a 13 percent cut. Missouri, which housed about 6 percent of the nation’s beef cattle at the start of the drought, lost roughly 8 percent of its herd.

In fact, national herd numbers are the smallest they’ve been since the 1950s and that’s important if you ever buy steaks or hamburger to throw on the grill. Low cattle numbers are a big reason meat prices are so high.

The trend started long ago.

“The drought the last three years has been the last straw, if you will, of a long series of events,” Peel said. “The U.S. beef cow herd has been downsizing for 16 of the last 18 years.”

But the bottom dropped out when drought hit Texas in 2011. Since then, the U.S. cattle herd has shrunk by 1.8 million head, or 6 percent. The losses are concentrated in Texas, Oklahoma and New Mexico.

Meanwhile, northern states like Montana, Nebraska, Iowa and the Dakotas have seen their herds grow, even though many pastures have been plowed up to raise corn. Montana, Nebraska and South Dakota currently each house about 5-6% of the nation’s cattle, but held steady while drought-stricken southern states lost portions of their herd. Texas, meanwhile, still holds about 13 percent of U.S. beef herd, down from 16 percent.

Peel says it’s all part of a larger structural change in the beef industry, due to recent weather realities.

Credit Grant Gerlock/Harvest Public Media
Van Housen Feed Yard mixes 22 loads of feed every day, adding up to nearly 200 tons of food for 8,000 cattle.

“It favors cattle feeding in the Midwest and less so in the southern Plains,” Peel said. “It also favors less cow-calf production in the Midwest and moving the cow herd proportionately back to the central Plains and the western part of the U.S.”

Even after the grass is green again in Texas, Peel says Nebraska is likely to hold onto the cattle-feeding crown it gained this year. More cattle will keep going north for supper and cattle feeder Terry Van Housen says the reason is no secret: it’s distillers grains that give Midwestern feeders an edge.

Distillers grains are the leftovers of corn ethanol production. Ethanol plants consume huge amounts of corn, but they also put out tons of distillers grains as byproduct, which can be used as an ingredient in inexpensive cattle feed. Van Housen gets the moist, yellow, sweet-smelling stuff fresh from an ethanol plant just 18 miles away.

“So that’s a big deal,” Van Housen says. “A lot of this stuff, if you fed in Texas, it would have to come from here.”

And as Van Housen says, it’s cheaper to take the cattle to the feed than take the feed to the cattle.