Drought Isn’t a Surprise
If you’re in the ranching business, drought is a normal part of life. David McLean is part of RCS, our sister company in Australia. David refers to planning for the average year as “riding the unicorn”. David says it a bit more colorfully, “Stop riding the bloody unicorn!” Managing your business for the average year is like riding the bloody unicorn. Let’s prepare for and seize opportunities that dry times present.
I’m writing this in late May, and in most of cow country throughout North America we already have a pretty good idea of what kind of year it is going to be. On my operation, June 1 is my last critical date for stocking decisions for the coming grazing season. For us, about 80% of the story has been told for what kind of year it is going to be in terms of forage production. If we need to adjust the stocking rate it should be done now, not in August when everyone else is finally starting to panic.
Let’s look at the impact of delaying destocking decisions. Assuming that average carrying capacity is 300 cows for 10 months, or 3,000 cow-calf pair months of grazing. Management thinks this year will see a 40% reduction in forage production due to low spring precipitation for a total of 1,800 cow-calf pair months. If we destock early, that is 180 pairs for 10 months. If we stay at 300 pairs, we will run out of forage in 6 months, leaving a deficit of 4 months of additional feed. In much of cow county last year’s hay was $300/ton. If we chose to feed hay for those 4 months, it would take 2 tons of hay per cow or an additional $600/hay per cow or $180,000 for the 300 cows. Delaying destocking can be extremely costly.
Droughts often present opportunities for those ready to seize them. As Bud Williams taught us, ranchers have three things in their inventory: grass, money and livestock. Each decision we make emphasizes one or more of these over the other. In early signs of drought, it is often smart to trade livestock for money and preserve grass. When the rest of the region figures out there is a problem, you will be in a strong position having money and grass when others do not.
Government programs too often screw up good decision making around drought. They are often structured to reward those slowest to respond to the signs of drought and are structured to compensate the livestock owner rather than the forage manager. Don’t let government program participation drive your decision making. Make the decision most reasonable for your business and if the program fits and participation is congruent with your values then consider participation.
I challenge you to change your thinking around drought. If you’re in the ranching business and are surprised by drought you aren’t paying very close attention. Like anyone else, I always hope for moisture during the spring, so I have grass to manage; but contingency plans are close at hand. I hope you are fortunate to be in the areas receiving precipitation this spring, but if not, will you let drought happen to you, or will you be proactive and prepare your business to seize the opportunities drought presents?