Cow Calf Drought Economics

According to the U.S. Drought Monitoring website (June 8-14, 2022), Drought coverage declined in the U.S. for the 13th straight week, according to the U.S. Drought Monitor. 

Wet and cool conditions from the Northwest to the Northern Plains led to more drought improvements. It has most of northeast Nevada classified as being in a Severe Drought (D2) or Extreme Drought (D3).  

The report also stated that 20% of Nevada’s pasture and rangelands were in poor to very poor condition.

So, depending if your cattle operation is located in  a Severe Drought (D2) or Extreme Drought (D3), or if your grazing areas received some spring rains which were beneficial for spring forages, you may need to make some important management decisions for the future of your ranch.

Unfortunately, there is no one-answer-fits-all relief from drought. Each operation has its own circumstances to consider. 

Those that planned ahead and made important decisions earlier may have more options than those that didn’t. 

 Some producers who have tight cash-flows and larger-than-average debt loads may find their options extremely limited, even facing decisions that can result in losing a lifetime’s work and a way of life—the herd must be reduced and, when that doesn’t work, eliminated.

Currently, market prices have been holding relatively steady to somewhat higher for cows and calves. Economically, it is not in a producer’s best interest to keep any open cows with such a limited amount of forage available. Spring calves could be weaned early and sold in the market. 

When deciding whether to keep or sell calves, one must consider if the potential revenue from additional gain would exceed the expected cost of the gain. If expected costs for additional gain are higher than the expected revenue, it would be a good time to market the calves. 

Selling the calves would also provide more forage for the cows to increase their nutrients and the likelihood of having a healthy calf in the spring.

“You cannot buy or borrow your way out of a drought”. However, there are alternatives that will let you keep up normal operations, at least for a time. Some of these alternatives include:

• Truck water to livestock.

• Connect to rural water for livestock use.

• Dig a well.

• Provide for better water distribution within pastures through pipelines, etc.

• Truck livestock out of the region or state to find additional pasture.

• Purchase hay or supplemental feed such as range cake or pellets.

• Graze or supplement with alternative feedstuffs such as crop stubble, rice bran, or almond hulls. ( )

• Place livestock out on shares with someone who has pasture available.

• Place livestock in feedlot.

• Sell the livestock.

The one thing all these options have in common is that they “cost” money, either through increased expenses or decreased income.

In a drought situation, the management goal usually is to minimize losses rather than maximize income. For example, long-term income-producing potential may be reduced, especially in a cow/calf operation, if the producer decides to sell cows. There will not only be loss of income that could have been derived from future calf sales. There also may be the loss of genetics and other specific traits the producer had worked to incorporate into the herd.

In this case, some producers may decide to eat the loss and hold on to the cows if the genetics built into the herd results in premium prices for the calves at sale time and if they expect that premium to continue in the future.

Each producer must answer: Will the costs of keeping the mother herd intact be more or less than the loss of income derived from lower sale prices in the future if part of the mother herd is sold? Can those genetics be purchased back in the future?

Deciding upon the option that is the best for a given situation is like making management decisions during normal weather years. The decision should be based on the pros and cons of each available option.

Partial budgeting may be the easiest and fastest way to decide. It allows for a quick look at the situation. Partial budgeting can be a first step to a more in-depth analysis. Sample livestock budgets can be found at your local county Extension office and on the web. Here is a link to the University of Nebraska’s Cattle Budgets:  

When working through the consequences of drought it is difficult to remember that drought is a cyclical phenomenon. Drought has occurred before and will happen again. The objective is to survive the current situation and be in a position to bring the operation back to pre-drought levels. With a well-developed drought management plan and with the support and assistance of others the likelihood of successfully coming through a drought will be improved.                                                 


• Economics of Managing a Livestock Enterprise During Drought, Martin K. Beutler

South Dakota State University Extension ranch management specialist.

• In Drought, Consider the Economics of Options When Dealing With Cattle, By Job Springer, Noble Foundation