Meat Industry INSIGHTS Newsletter

980812 Texas Cattlemen Face Herd Liquidation

August 5, 1998

Navasota, TX - Rancher Matt Moore gestures at the dusty line of bawling cattle moving across one of his pastures, ground that should be lush with grass - but is instead crunchy dry and woefully short due to drought.

"Basically what they're getting is just a little pickings off the grass," said Moore, 29, whose family has raised cattle on this land near the Brazos River for five generations. "We're not able to feed the cattle we have been."

Indeed, Moore said during a visit by Agriculture Secretary Dan Glickman that he's only fattening about 250 calves this summer instead of the usual 900, because pasture is gone and alternative feed is too expensive or cuts into necessary winter stocks.

Ranchers in the nation's No. 1 cattle state are beginning to liquidate their herds because of the driest Texas midsummer on record.

"We're only starting to feel the effects of this thing," said Curtis Burlin, who runs the Navasota Livestock Auction Co. where auctions are running 30% ahead of last summer. "If you have to sell them all, it'll take you five years to grow new cows."

A Texas A&M University study released estimated a 50% loss in the state's crops and cattle forage at a cost of nearly $1 billion. Cattle losses are projected at $180 million because of premature sales and added feed costs. Both numbers are sure to worsen if the drought persists into August.

"We're sitting on what could be one of the worst natural disasters in Texas history," said state Agriculture Commissioner Rick Perry, who said some auction houses are selling 10 times the number of cattle they did last year at this time.

For consumers, this could mean a temporary drop in beef prices as more cattle are slaughtered. In the long term, however, beef prices at the supermarket could rise as herds are thinned out and some ranchers quit altogether.

While the U.S. Agriculture Department projects crop insurance payouts of up to $700 million in Texas this year - enough to cover maybe half of the farmers' actual losses - that money won't cover scorched pasture, withered hay or underweight cattle.

"The livestock producers are kind of left out right now. They have no protection," Perry said.

Although all 254 Texas counties have been declared federal disaster areas, the low-interest loans available to producers are of limited use and available only if they have been turned down twice by other lenders. And many farmers can't afford to take on more debt.

On Capitol Hill, lawmakers are considering a $500 million aid package for the Southern drought and chronic wet weather in the northern Plains. Part of that $500 million - a total Glickman said "is probably not going to be sufficient" - would be spent on replenishing the livestock program.

"We need some resources out here immediately," Glickman said.

He said the Clinton administration intends to ask Congress to reform crop insurance early next year to improve protection against natural disasters, including a permanent feed assistance program for livestock.

"Nature should not be the determining factor in whether a farmer or rancher survives," Glickman said.

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Iotron Technology Inc.


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