Ranchers remain cautious despite El Niño forecast


Issue Date: August 19, 2015
By Ching Lee
Lack of grasses on California pastures from four years of drought has caused cattle ranchers to reduce the size of their herds. Ranchers say they remain cautious about the prospect of rebuilding those herds, despite long-range predictions of the potential for a wet winter.
Photo/Richard Green

With talk of a strong El Niño brewing and with it, the potential for above-average precipitation this fall and winter, California livestock ranchers say they are hopeful about getting some relief from the drought. But they remain cautious about their plans for rebuilding their herds.

Poor pasture conditions and high feed costs have pummeled California ranchers during the last four years of drought, forcing many of them to sell their animals, even when market demand gave signals that they should be expanding.

Ranchers say they're reluctant to put too much stock in weather predictions that might not pan out. They also point to other factors unrelated to the drought that could thwart their ability to grow, such as the high price of cattle and availability of land.

At a recent cattle sale he attended, Mariposa County cattle rancher Tony Toso noted how top-selling heifers were going for as much as $4,200 per head, a price he described as "phenomenal." He was not in the market to buy, he said, because he doesn't have enough land to expand.

Still, he said there are signs that some ranchers may be thinking about rebuilding, with "heifer retention starting to get traction."

"If we get good rain this year and the feed looks half decent, guys are going to get optimistic fast," Toso said.

Anticipation of rain or forage growth usually drives cattle prices "through the roof, because people are trying to restock their herds," said Dan McQueeney, who leases his land in Napa County for cattle grazing. Cattle prices also rise when corn prices are lower, because feedlots are buying more cattle, he added.

McQueeney said he is not planning to buy any cattle either. He liquidated his herd during the drought when he ran short on feed and won't be getting back in the business. He said he didn't want to go into debt buying hay, having seen his family "struggle to dig out of the hole" when they tried to "feed through the drought in the '70s."

With a son who just graduated college and wants to go into the cattle business, Sacramento County rancher Walter Hardesty said he would like to expand, if only he could find more land to lease. Although he's expanded his search from the Sacramento Valley to Oregon, he said affordable grazing land is hard to find, with ranches being converted to trees and vines.

"We retained a lot of our heifers and are ready to go, but being that it's short feed everywhere, nobody has any ranches for lease," he said.

Buying cattle at current high prices and then leasing ground to feed them is a "big risk on your investment," Hardesty added, noting that he would rather expand by retaining heifers, which would take him two to three years to double the size of his herd.

Toso said ranchers who operate in the foothills are more limited in their choices, because they are careful about buying cows not already exposed to ticks that spread diseases such as foothill abortion and anaplasmosis, often a source of economic loss.

While he's hoping for more rain, Solano County sheep and cattle rancher Richard Hamilton said he is not making any drastic changes as he tries to build back his numbers slowly. He has maintained the size of his flock, but he made some significant cuts to his cattle herd two years ago. This year he retained more replacements, but he said he's not trying to get back to where he was yet.

"I'm not saying El Niño is not ever going to happen," he said, "but I'm not going to get overzealous, because our pastures have suffered over the last few years and Mother Nature needs a chance to build them back up before we think about any major increase of anything."

In the sheep business, Hamilton said there are other issues that could make expansion more difficult, such as predation, the high cost and availability of labor, and the loss of crop residue and alfalfa fields on which sheep ranchers depend for feed. The overall decline in the nation's sheep numbers also has weakened the sector's infrastructure, he added.

"There'd have to be some major changes in the sheep industry for me to consider ramping my sheep numbers up any higher than they are now," he said.

Some ranchers, such as Sam Travioli, who runs cattle in Tulare County, have started to rebuild. He had to reduce more than half his herd during the last few years due to lack of feed. Having had "a decent grass year," Travioli said, he "kept more heifers than usual in anticipation of the rains." He estimated it will probably take him about five years to get back his numbers.

"If we get good rains this winter and have a good season, I think you'll see a lot more rebuilding next year," he said.

For many ranchers, the decision to keep or sell calves likely won't come until next spring, said Roger Ingram, a University of California Cooperative Extension farm advisor for Placer and Nevada counties.

Even though the state received some heavy rains last fall, he noted the dry spring did not produce much grass, which means there won't be much feed on the ground this fall, limiting ranchers from increasing their herds now. Even if there's adequate moisture this fall and winter, grasses won't grow much until March, he added.

"It's not an instantaneous kind of thing, like, here's a bunch of rain and here's a bunch of grass," he said. "It would translate to better forage conditions in the spring, but this fall and early winter will still be kind of tight."

Many calves are born from October through December, Ingram noted, and they are weaned in May or June. Ranchers who decide to retain a heifer will typically wait six months to a year before breeding her, so getting a calf from that animal will probably take two to three years.

Lower hay prices have helped ranchers, he noted, but cheaper hay won't influence them to do much herd expansion until range conditions improve, even if they plan to buy cattle.

"Cattle prices are probably at their highest level ever, but as numbers begin to build, the value of that cow will drop, so you've got to watch the depreciation on that cow," he added.

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

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