Drought forcing cattle sales
Weak market adds stress as some producers sell good producing cows
After hail, flooding, a severe drought and a depressed market – all within months – Mike Kertzman says his days of ranching might be numbered.
“I live in hail alley, I’m used to tough weather, I get it all,” he said. A 10-inch rain and numerous rounds of hail stressed his corn this spring. But ironically the biggest stressor he’s dealing with is drought on his rented pasture just 25 miles away.
He puts up hay and plants corn for silage on his home place, near Hazelton, North Dakota which is about 50 miles south east of Bismark. He pastures his cattle on rented ground 25 miles to the south and 25 miles to the west. Much of his alfalfa was killed by the flooding, and the low-lying hayfield is covered with cornstalks and other material he said, but he is putting up the available grass for hay.
Trying to preserve his grass and keep his cattle in good shape, Kertzman sold his younger cows with calves at side before turnout.
“I sold about 200 pairs. We dried up last summer, so our pastures were pretty bad to begin with. I didn’t want to overload everything. I started off selling all my replacements,” he said. Then, soon, he hauled his 2-6 year old cows as pairs. The market was tough, in large part because the drought is so wide-spread. “This drought is so wide and has hit so big of an area, that’s the worst,” he said.
“I sold them all. I took a devastating hit. I don’t think I’ll ever recover from this one, this will be the end of it,” he said, fearing that he won’t be able to afford to buy cows when the rain comes.
“I’m already financially hurting from the pressure of years with high prices, and then all of the sudden, prices went way down.”
Kertzman bought cows in 2014 when the market was high, hoping to capitalize on what many experts predicted would be a multi-year run of strong cattle prices. “There was talk that the market was supposed to hang in there for a while. I was doing fine, everything was working, then all of the sudden the market fell out from under us, and there you are. You can’t do this stuff without equipment. I run pretty hard, it’s just me, I do a lot of all day and all night work, I need good equipment.”
With less hay than usual, and limited and expensive hay availability on the market, the future looks tough, he said.
“Who knows what’s going to happen. I don’t think there will be enough feed. What do we do next year? If we don’t get a bunch of snow or rain or something, there ain’t going to be grass next year either. Basically, we’re in a two year drought right now,” Kertzman said.
McHenry County, North Dakota, in the north central part of the state, is considered to be in “exceptional drought,” the worst drought rating.
A representative for the USDA Farm Service Agency in that county said some of their producers have signed up for the Livestock Forage Disaster Program, which is only available to producers in a qualifying drought area. The program is intended to provide assistance to producers whose grass or other forage is significantly reduced due to drought. The payment depends upon the severity and length of the drought as reported by USDA.
Rick Bostyan, the Vice President of First State Bank of Beach and Golva, North Dakota, which are on the far west side of the state, said he hopes ranchers take advantage of that USDA program. He also fears some ranchers who have sold significant numbers of cows won’t be able to buy back in anytime soon.
“Things are tight already. The sad thing is, some of these producers, they were borrowing money from the time they sold their last calf crop. There are going to be some hard decisions made as far as what you will spend to keep your cattle on your place,” he said.
“Where we’re sitting right now, we’re very, very dry. No one believes the pastures are going to last long enough to get the calves to weaning, a lot of them are making plans now to either wean early to hopefully get some pressure off the cows.
“As far as culling cows, they’ve done some already but I think we’ll see an increased cull rate once the calves are off, too,” he said.
Buying enough hay to winter cows, without selling down to reduce numbers, might be risky, he said, but he hopes to see some government assistance so that ranchers can buy enough hay to at least keep their foundation herds intact.
As for government price support for the cattle being sold, he fears a program like that could be difficult to administer fairly.
“By the time it (hay) is shipped out here, it’s going to be well over $200 per ton and I don’t think most of the ranches can support that kind of price. It would help if we got assistance like we got a few years ago where they covered trucking for this hay,” he said, referencing a state program spearheaded by the Secretary of Agriculture, Doug Goehring. He also said a boost to the existing Livestock Forage Disaster Program under FSA could be helpful. “If they could possibly increase that amount, I think that would be a fairer way to do it,” he said.
Independent Beef Association of North Dakota President Kerry Dockter said he would like to see some additional assistance for producers buying more feed than usual, and he stressed the need for the assistance to come quickly.
He mentioned that some ranchers are asking neighboring farmers if they can put up droughted out wheat for hay. “That wheat is starting to turn, soon there is going to be nothing but straw and there is very little in the heads. There is a short window of time to get it up,” he said.
“The point is if they are going to make it available, they need to make it available fast,” he said.
Dockter said, with feed assistance, maybe more producers could secure the hay needed to hold onto the nucleus of their cowherds.
Perhaps through the infrastructure support bill being discussed in Congress, financial help should be offered to ranchers selling cows, he said. “Maybe make something available as strictly cow-calf producers that they will be able to get funding to get back into the business and hopefully the business will be profitable like it’s supposed to be.” Dockter said some kind of price support for those ranchers who sold cows this spring, or will sell producing (not cull) cows this fall could prop them up so they are in a position to buy cows back when they get moisture. One idea would be for the federal government to kick in the difference between the actual price of the cow, and profitable price. If it is determined that pairs should have been worth $2,100 this spring, and a producer sold pairs for $1,200, he or she would get the price difference in the form of a federal subsidy.
Because the cattle market has been strained for several years, a long-term solution to the market woes would help take pressure off producers, said Dockter.
“At the national level, we’re trying to limit packer concentration and allow feeders and producers to capture some of that profit that is stuck on the packers’ side,” he said, referencing packer profit margins of over $1,000 per head for the past several months.
“You spend a lifetime working on a herd that works for you in your geographical location and that you’re proud of. You can’t build that back in a couple years’ time,” said Dockter.
Kertzman echoed the challenges of tough markets.
“As long as they let the packers do what they want, this price is never going to get better,” he said.
“It’s legalized crime. The anti-competitive pricing. They (elected officials) aren’t doing anything about it. They don’t think they need us (ranchers.) They need grain farmers, that is where this country’s main borrowing power is,” Kertzman said.
“For what they are paying us for our cattle, beef should be affordable, people should be eating beef every day.”
Kertzman has been involved in value-added programs to capture the worth of his calves, and he has retained ownership on his steers, finishing them through a Kansas feeder, but still, the low market combined with the drought has strained him to a breaking point.
“It takes too many years to rebound when you have a bad ond in the cattle industry,” he said.
“Just pay us for what we do. I just want a fair price. I don’t want government help, I’m not a big fan of that stuff,” Kertzman said. “Why do we take a 25- 30 percent increase in groceries or parts and we’re taking a 25-30 percent decrease in the product we sell? That’s not right.”
“Basically, all I have left is my older cows, my foundation herd,” Kertzman said.
“It’s not the bank’s fault, it’s just the way it is. I thank God that I had an awesome bank to work with. They are awesome, they tried to help, but nothing worked. That’s the worst thing, nothing worked,” said Kertzman.
Bostyan reminds producers that the drought is no fault of theirs. “I’m a rancher myself. I tell our producers, This is something that isn’t their fault. It’s not a management issue, it’s weather. We don’t have to fine tune their management, just give them some options and decide what works best for them.”
“We’re just to the edge of this, we’ll see in another month, if a lot of cattle are going to market,” he said. •
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