Missy Bonds is banking on a wet fall and spring for her family’s ranch near Saginaw. Business depends on it.
Running cattle means constantly keeping an eye on how much pasture the animals have to graze and how much water they have to drink. Bonds was able to manage the herd through the summer, but a nearly200-acre grass fire in Julythrew things into uncertainty.
The area still looks as if the fire happened yesterday, Bonds said. Not enough grass or water could mean the ranch has to sell some of their cattle.
“People are at this point — we’re down to kind of just the bare minimum,” Bonds said. “Trying to hold on to what they can.”
Pressures from years of widespread drought and rising costs of raising cattle are forcing ranchers in North Texas and across the U.S. to manage smaller herds. Beef production is expected to decline by 24.7 billion pounds, a historic low, according to the U.S. Department of Agriculture.With fewer cattle being raised, experts say consumers should expect the price of beef at grocery stores to rise to new highs.
A major culprit for raising fewer cattle is drought.
Almost the entire western half of the country experienced drought conditions last year, according to the University of Nebraska’s U.S. drought monitor. This year, themajority of Texas is experiencing abnormally dry to exceptional drought conditions this year, according to the monitor.
David Anderson, a professor of agricultural economics and extension economist with Texas A&M University AgriLife Extension, said the drought conditions forced ranchers across the country, including in Texas, to reduce their cattle herd.
“Cows are out on grass and ranges and pasture,” Anderson said. “If it doesn’t rain, you don’t get any grass. And so you can’t have as many cows.”
Economic conditions, such as high fertilizer prices and a lower selling price during the pandemic, also caused ranchers to reduce herds. Those factors are reflected in sale prices. The average price of a steak across cuts in August was $7.65 per pound, according to the Bureau of Labor Statistics. That’s slightly down from the all-time high from July, Anderson said, but consumers can expect the prices to remain high.
“Tighter supplies yet continued demand for the product by consumers has kept that retail price high,” Anderson said.
Every week, Kimberly Irwin, co-owner of Decatur Livestock Market LLC, has seen higher sales of cattle than normal. A normal sale would see about 1,200 head of cattle — but she said she can regularly see up to 2,200 now.
It’s not only a lack of green grass that’s spurring ranchers to sell. Available water is an issue, too. Groundwater tanks started to dry last year and never recovered. This summer, many rancher’s already low wells ran out, she said. Many ranchers sold their old cows first, in hopes of having a young herd to keep going forward. But she said many ranchers are selling young calves now to survive. Irwin, who has been running the market for 20 years, has seen droughts come and go over the years. This time is different.
“I haven’t seen it last this long … because it’s two summers in a row,” Irwin said. “It’s been real bad. It’s been bad before, but then we recover by the next spring.”
Less supply for cattle means ranchers are ultimately getting paid more, and processors are paying and selling the meat for more, Juan Alfonso Ramos, CEO and owner of Fort Worth Meat Packers, said.
“We charge a higher price than we would have in the past because our costs are higher,” he said.
Ramos, whose family owns a ranching company that operates in Texas, Oklahoma, New Mexico and Mexico, said drought conditions have posed a challenge. While they haven’t had to sell their cattle, they aren’t expanding either.
They have gotten rain in their area, which has relieved some pressure, he said. But while some places have gotten much-needed moisture to their pastures, he notices while driving across West Texas, New Mexico and Oklahoma that most places are dry. The longer it takes to replenish herds, the longer the higher prices will persist, he said.
“If we don’t have heifers turning into cows, to then have calves and then further regrowing the herd, it’s going to continue to be a very difficult situation for the live cattle herd to regrow,” Ramos said. “And that’s going to continue to put upward pressure on cattle prices … and meat prices for the consumer.”
Seth Bodine is a business and economic development reporter for the Fort Worth Report. Contact him at seth.bodine@fortworthreport.org and follow on Twitter @sbodine120.
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