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Scaling back their herds through the drought, ranchers continue on faith

Business has been good lately at the Western Stockman's Market cattle auction in McFarland. Too good.

Local ranchers have brought in so many beef cattle since March that the number of sales this year is up between a quarter and a third. The manager there blames the drought.

"It wasn't much of a grass year," CEO Justin Mebane said.

Conditions drier than longtime cattlemen say they've ever seen have forced ranchers to sell off uncomfortably large portions of their herd.

With feed costs prohibitively high and meager prospects for quality pasture anywhere across the West, ranchers' hope is that cattle sales will tide them over until rain patterns improve so they can start to rebuild their inventory.

TOUGH TIMING

Here's the bitter irony: California ranchers aren't benefiting from strong beef prices at grocery stores lately. Processing bottlenecks since the start of the pandemic have created a temporary glut of product that has limited prices paid to ranchers.

The situation tests the faith of a typically multigenerational industry where drought-planning is as ingrained as optimism about next year's rain season.

People in the business say there's more talk lately about whether it's time to cut their losses, even if that means ending a tradition that in many families stretches back locally 150 years or more.

With that comes another irony that may be of little consolidation to ranchers who've had no choice but to scale back. Following a roughly 10 percent year-over-year increase in the number of U.S. beef cows sent to slaughter, a pre-COVID-19 rise in cattle prices is expected to resume no later than the end of next year.

Dustin Aherin, animal protein analyst and vice president at RaboResearch, said ranchers who can survive the next six months to a year should see "a lot of potential on the other side. But it's getting to that point."

HANGING ON

Jeff Bowen, a fifth-generation rancher in the Glennville area, has watched his peers cull their herds by half or more this year, which is a lot in an industry where the goal often is to build up inventory.

While he's somewhat buffered from the drought because of the relatively high elevation of his family's pastures, he worries others might not be able to hold out.

"We'll hang on as long as we can," he said. "We've been doing it for a long time."

Local ranchers say the recent heat has been less challenging than the lack of water. Not only does it make grass harder to find locally, but because the drought covers almost all land west of the Dakotas, there's little sense sending cattle by train to Nevada or Oregon for part of the year, as many California cattlemen do.

Meanwhile, a combination of global factors has pushed up prices on quality feed like corn and alfalfa. Local ranchers say even alternative feeds like almond hulls and cottonseed have gotten too expensive.

NOTHING LEFT

Dave Thompson counts himself lucky. A rancher in Kern County for more than three decades, he sold half his herd this year and moved the rest to irrigated land in Oregon.

What worries him now is coming back down south. Normally he leaves some grass on the ground for when the rain returns. This year he didn't have that luxury.

"We didn't leave anything this year. It's all stripped down to the dirt," he said. "That's going to be the big challenge."

The president of the California Cattlemen's Association, Mariposa County rancher Tony Toso, said the dry spell between about 2011 and 2014 was difficult for the industry but that he's hearing conditions amid the current drought are "as bad or worse." Too often what little rain does come arrives at the wrong time of year such that it can be counterproductive, mashing down standing grass.

More ranchers are taking the grudging step, he said, of selling off replacement heifers they would normally count on to give birth to new calves come fall. He said it may also be that more younger cows than before are being sold at auction.

EXTREME MEASURES

He said a friend of his took the drastic step of paying to haul his entire herd all the way to the Midwest, even with transportation costs relatively high. He also mentioned a three-brother ranching family he knows that recently agreed to walk away and sell everything, pasture lease and all.

Toso has heard prices are expected to rise. But as he sees it, that comes on the back of guys who have had to downsize.

"It's not the way you want to grow the price," he said.

Demand for beef has been strong during the pandemic as people stockpiled food and spent more time cooking at home, said Aherin at RaboResearch. Beef ate up a bigger share of consumer income — and probably a fair amount of federal stimulus payments, he said — and now with restaurants reopening beef prices have picked up again.

Meanwhile, U.S. beef exports to China have exploded in about the last nine months, underscoring Aherin's point that prices are up not so much because of a shortage of product as a jump in demand he doesn't expect will decline in the near term as Americans fire up the grill this summer.

LIMITED BENEFIT

Unfortunately for ranchers, wholesale prices are a separate matter.

Aherin said the beef industry has more product on its hands than it can process because of a lingering labor shortage and bottlenecks at plants. The result is that high retail prices aren't translating to stronger prices for cattle.

Still, cattle prices aren't awful lately, he noted: At about $125 per hundredweight average prices are up almost 14 percent from two years ago. He predicted the average won't fall below $115 for at least a couple of months and that it may come close to $130 by the end of this year.

There's another reason for ranchers who make it through the drought to be optimistic. Aherin said the overall U.S. herd size is expected to decline a little more than 2 percent to 30.5 million head of cattle by the start of 2023. That estimate is vulnerable to drought conditions, he added, and could end up lower.

KEEPING FAITH

Kern County rancher Austin Snedden certainly hasn't given up hope. But it's been hard.

In a normal year he tries to grow his herd by about 10 percent, if only to build a cushion for drought years. Instead, this year he had to reduce the herd by about a third, simply because there hasn't been enough grass growing on his property between Cuyama and Maricopa, where his family has ranched for more than 150 years.

He said the family business will be OK, assuming it rains next year. Even if it doesn't, the family should be able to hold out another year. But after that, if the drought hasn't let up, then the money might start to dwindle.

None of this is unheard of in the history of California ranching, Snedden said, and in the bigger sense he's not worried.

"The Lord's always provided," he said, "by eventually giving us rain."