No relief in sight for livestock owners suffering effects of drought
By RAJU CHEBIUM, Gannett Washington Bureau
WASHINGTON -- Wellington dairyfarmer Jon Slutsky estimates he will pay $1.15 million for hay this year -- nearly twice what he paid in January 2011 -- because drought conditions have led to soaring demand for alfalfa.
That's on top of the hundreds of thousands of dollars he's spending on grain, whose price also has shot up because of drought-induced shortages of corn and soybeans grown in Colorado and the Midwest.
"As the weeks and months go by, there will be more dairies selling out," said Slutsky, who owns La Luna Dairy. "This industry, we're bleeding right now."
Northern Colorado's dairy industry isn't alone in suffering financially due to the drought. Tens of thousands of cattle, sheep and horse farmers and ranchers who make up the state's multi-billion-dollar livestock industry also are feeling the affects. And their pain may continue for many more months, experts say.
Drought conditions affecting more than half the country are expected to cost farmers about $12 billion nationwide, according to preliminary estimates.
The drought's economic impact on Colorado hasn't been calculated yet, but it's taking a toll on Slutsky.
To continue feeding his 2,100 heads of cattle, he's putting off maintenance projects on his 60-acre farm, delaying equipment purchases and going deeper into debt. He hasn't had to sell cattle or lay off any of his 26 workers, but that could change if milk prices don't climb next year as the federal government predicts.
After oil and gas, agriculture is the second-largest industry in Colorado, generating about $4 billion a year, said Shawn Martini, spokesman for the Colorado Farm Bureau. About two-thirds of Colorado's 200,000 farms belong to cattle, sheep and horse owners, he said. So an ailing agriculture industry will have ripple effects on the state's entire economy.
The biggest problems livestock owners face are scarce grazing grounds and escalating prices for hay and grain, experts say. Many ponds on farms also have run dry, though Slutsky said water shortages aren't a huge problem in northern Colorado.
He predicted some livestock owners will be unable to cope with the high production costs and will get out of the business.
Most others are expected sell off some cattle or postpone investing in their farms or ranches, said James Pritchett, a Colorado State University agricultural economist.
Agriculture Secretary Tom Vilsack has warned of higher prices for everything from milk to beef in coming months.
Last month, the Obama administration decided to allow grazing and haying on some of the 29.6 million acres in the Conservation Reserve Program, which pays landowners to leave environmentally sensitive land untouched for at least 10 years.
Pritchett said he supports that move.
"Because the geographic scope of the drought has increased, there aren't as much leased pasture that ranchers can go to with their ... herds," he said. "So they're faced with some decisions ... should they choose to buy hay at very high prices or should they depopulate the herd?"
Opening up additional grazing areas means strapped livestock owners could spend less on feed and more on paying down their debts, Pritchett said.
Martini said making reserve land available also would lower feed prices. That would benefit Coloradans because neighboring states are unable to boost hay supplies, he said.
"A lot of states that we will typically truck hay from are having droughts of their own," Martini said. "You have a lot of hands out, not a lot of hands giving hay to the market."
On Tuesday, the U.S. Agriculture Department announced additional drought-relief measures. Those include a $30 million aid package partly designed to provide water and emergency forage to livestock owners, which is expected to lower prices.
Any price drop is welcome news for Slutsky, who typically buys about 5,000 tons of hay annually. He has seen feed prices climb from $130 a ton in early 2011 to $230 a ton this summer.
"That's a bargain," he said in a telephone interview Thursday. "There are guys who are paying $300 a ton. There are people talking about prices going to $400 a ton."
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Contributing: USA TODAY and Christopher Doering, Gannett Washington Bureau.
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Contact Raju Chebium at rchebium@gannett.com
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On the web:
www.c2es.org/science-impacts/extreme-weather, Center for Climate and Energy Solutions graphic showing droughts and other extreme weather events since 1990.
http://droughtmonitor.unl.edu, National Drought Mitigation Center graphic showing drought's nationwide impact.
