SO. DAKOTA STATE ISSUES UPDATE ON BLIZZARD'S IMPACT
Oct. 28, 2013
Source: So. Dakota State University news release
Three weeks after the Oct. 4 and 5 disaster, the economic impact on ranchers and their families - like the livestock death toll - remains a climbing estimate. Digging out from the two-day blizzard that wreaked havoc on much of western South Dakota and killed more than 25,000 head of cattle, sheep and horses will take much more than snow removal, said Dan Oedekoven, Director of the South Dakota State University West River Ag Center.
"Ranchers have some real financial struggles ahead of them - and it goes beyond the immediate loss of income from calves they no longer have to sell this fall," Oedekoven said.
A cattle producer himself, Oedekoven explained that most ranchers are part of a family business that is several generations old. With each cow killed in the storm, that rancher not only lost the calf that would have been born in the spring of 2014, the family lost future access to valuable genetics.
Jim Krantz, SDSU Extension Cow/Calf Field Specialist agreed with Oedekoven, explaining further the long-term impact lost genetics will have on western South Dakota ranchers.
"A cow or heifer only has one calf each year, so it takes years and generations to develop genetics," Krantz said. "Each ranch is unique and may have different genetic needs based on the environment, feed resources and country they live in."
The number of cows, calves and steers lost to the storm varies greatly from one ranch to the next, said Adele Harty, SDSU Cow/Calf Field Specialist. Harty was among several SDSU Extension staff who walked among the carnage and served as third-party verifiers.
Some ranchers lost 700 head, while their neighbor may have only lost 10 cows. Harty said we'll never know the exact numbers because some ranchers aren't reporting.
"Losses like these are very personal for the ranch families. Many feel they have failed because of what happened. Its heart wrenching for them and for those of us who work closely with the ranch community," Harty said. "For some ranchers, this storm took their livelihood. Ranching is what they do, what they love to do and for some, the only work they've ever done."
For Harty, who grew up on a cattle ranch in eastern Colorado, the losses her clients face are very real. For those who are not involved in agriculture or don't own their own business, Harty explained the impact of these death losses like this:
"Imagine you lost your job and you know that you will be unable to get another job for two years (which is what happened when rancher's fall calf crop died and their cows, pregnant with the 2014 calf crop, also died). While at the same time you have to make payments on a $100,000 credit card or you'll lose your home and the land your great-great-grandfather homesteaded," Harty said.
She added that in some cases, the debt livestock producers carry is much more than $100,000. The operating loan, used to cover feed, equipment and the costs of new cows, and is expected to be paid off each year with the sale of calves in the fall.
Livestock losses extend beyond cattle. It's predicted that more than 4,000 sheep and several hundred horses were also lost in the disaster.
"I've talked to 15 horse breeders who combined lost 350 horses, and the majority of these were young horses, under 2 years old," said Mindy Hubert, SDSU Extension Small Acreage Field Specialist.
"That's over 20 horses per ranch, and I know there are many, many more ranches out there that lost horses. Like cattle, the horses were not ready; they didn't have their winter coats. It's as if Mother Nature wasn't ready for Mother Nature," said Hubert.
Hubert explained that like cattle producers, horse breeders lost generations of genetics and future income in the storm.
"I have already heard from horse trainers who will have fewer clients, because they either lost horses in the storm, or lost so many cattle that they can no longer afford to have their horses professionally trained," Hubert said.
To learn more about how the storm's early fall timing made it particularly devastating to all livestock, iGrow.org, and search for the article "Understanding What Happened."
WHAT WE KNOW AT THIS POINT.
"Information compiled by Rosie Nold, Ag & Natural Resources Program Director, SDSU and; Darrell Mark, Adjunct Professor of Economics at South Dakota State University"
Among the South Dakota counties hardest hit by the Oct. 4-5 blizzard were the 12 counties comprising the Northwest and West Central agricultural reporting districts of Butte, Corson, Dewey, Harding, Perkins, Ziebach, Haakon, Jackson, Lawrence, Meade, Pennington and Stanley.
According to USDA's National Agricultural Statistics Service, these 12 counties had 769,000 head of cattle and calves as of Jan. 1, 2013. Of these, an estimated 456,000 head were beef mother cows on ranches.
While final losses are still being tallied, South Dakota's Animal Industry Board estimates up to 25,000 head may have perished in the storm. This implies upwards to 5 percent of the region's cow herd could have been lost in the blizzard.
"To those not familiar with the beef cow industry, a 5 percent loss of beef cows in just one part of one state might seem small, but the economic impact on the region and state are significant and will be felt for some time," said Darrell Mark, Adjunct Professor of Economics at South Dakota State University.
Mark added that the impact on individual ranchers suffering the losses is especially large.
"Some individual ranchers have had confirmed losses of over 20 percent of their herd. Though not verified through official reporting venues, many reports indicate much higher losses, exceeding 50 percent of herds in some cases," Mark said.
Based on 2007 Census of Agriculture data, the average beef cow herd size is about 155 head in Northwest and West Central South Dakota. Even a 10 percent loss for such an average sized operation would be about 16 head.
Given the high cull rates in recent years, caused by drought and high feed costs, it is expected that many of the beef cows that died in the storm would have been young cows near the peak of their productivity, Mark said.
"Current market prices for good, young bred cows generally range from $1,500 to $2,000 per head and prices for pairs or cows with calves at their side range from $2,000 per pair to $2,500 per pair," Mark said.
So, he explained further, for an average loss of 16 head of cows conservatively valued at $1,500 per head, the total value of the death loss is about $24,000.
"The rancher with a 20 percent death loss having an average herd size of 155 head could have lost more than $46,500 in the value of cows alone," Mark said. "Of course, some ranches are much larger than these averages and lost 75 to 100 head of beef cows - or more - which would be valued from $112,000 to $150,000. Financial losses of a quarter million dollars or more to an individual rancher are quite possible in many situations, just from the cows that died in the storm."
The value of the lost beef cows is only part of the financial impact that ranchers will experience from this storm, explained Rosie Nold, SDSU Extension Ag & Natural Resources Program Director, SDSU.
"In the short run, costs for recovery efforts will include fence repairs and disposal of dead animals. Reports are also coming in that there is death loss among cows that survived the storm, and calves have reduced immune function, making them more susceptible to respiratory and other diseases," Nold said.
In the longer run, Nold said rebuilding herds will be more expensive, and in some cases, difficult to achieve at the same level of quality as before the blizzard.
"Ranches affected by the storm included both commercial cow-calf operations and seedstock producers. For all, fewer replacement bred stock will be available in the region, but also nationwide," Nold said.
She added that because total beef cow numbers in the United States are at the lowest level they have been since the 1950's, high quality breeding stock is in short supply across the country.
"For some operations, seedstock in particular, breeding stock with the desired genetics may not be available or will be significantly more expensive than the average prices quoted above," she said. "Prices for such high quality breeding stock commonly range from $3,000 to $10,000
per head, but the value of losing decades worth of genetic selection in a herd is incalculable."
Looking at the entire financial picture, Mark explained that ranchers are likely to become more leveraged as their asset base decreased with lost cows and their sales volume declined due to loss of calves that were days or weeks away from being sold.
"Ranchers' interest costs for maintaining their remaining operation, and possibly re-growing their operation, will be higher as well," he said. "Many of these costs cannot be calculated until more is known about the actual size and scope of the losses incurred by these ranchers. Yet, it is likely that some producers hardest-hit by this storm could become insolvent as they try to recover."
Both Mark and Nold said that the economic impact of the blizzard will also be felt across the state and regional cattle industry as well as on Main Street businesses throughout western South Dakota.
"Already tight feeder cattle supplies have been further reduced by the storm. This may result in slightly higher prices cattle feeders pay for feeder calves and fewer cattle to place in feedyards this fall and winter," Mark said. "Already high prices for high quality breeding stock will be driven higher."
Additionally, Nold said the loss of an estimated 25,000 head of beef cows will not only have a nearly $40 million direct and immediate impact on ranchers who owned the cows, but there will also be other recovery expenses and lost revenues for years to come. The magnified indirect and induced economic impacts will be felt in the regional
economy as ranchers spend less money on goods and services, which ultimately will affect nearly all main street businesses in the area.
THERE IS HOPE.
Even today, three weeks after the storm, Amy Cammack questions her actions as she worked to protect her herd in the wake of an imminent storm.
"I wonder why I didn't do something different," she says of her decision to push a group of cows into an old farm stead where she thought they'd find shelter in old buildings. But instead, the cows drifted with the wind, piled up and died along eight fence lines. "If I'd left them where they were, they may have drifted into a neighbor's stackyard and the outcome could have been different."
Amy and her husband, Gary ranch and operate Cammack Ranch Supply in Union Center. Because of their ranch supply business, they understand that they are not alone in their loss of cattle. Each day, they visit with customers whose stories mirror their own or are much worse.
"This goes beyond economics. I don't know a single rancher, that when he pulled over the hill on horseback or snow mobile and saw the carnage thought about economic loss," said Gary, who also serves as District 29 State Representative. "Their first thought was far from
economics. Their first thought was their responsibility to care for
those animals. And there those animals lay dead in a pile."
He added, that like his wife, their next thought was, 'what could I have done differently?'
Of all those impacted by the storm, Gary is most concerned about young cattle producers who were just starting out; and then he added, "young or old, if you see 50 to 80 percent of your herd and equity lost within 48-hours, that can be devastating."
David Koupal reiterates Gary's statement. Koupal is an instructor for the South Dakota Center for Farm/Ranch Management at Mitchell Technical Institute. Throughout the disaster, he worked closely with SDSU Extension personnel and area ranchers as a third-party verifier.
"You cry with them and understand their pain," said Koupal, also a cattle rancher. "And together you try to find a bright spot among all the devastation - like every time you find a live animal or hear that some of your cows that you thought were dead are actually alive in the neighbor's pasture 10 miles away."
He went on to share an experience that happened while he was verifying hundreds of dead cows on a ranch. The rancher spotted a live cow and shook his head in disbelief.
"The rancher began to tell me a story about how in 1997 after a blizzard, not as bad as this one, but bad enough that he lost a lot of cattle, there was a heifer calf who survived. He nursed the heifer through pneumonia that winter and she had the first calf that spring. The rancher named that calf Hope," Koupal said. "And that cow he spotted; she was Hope. I retell this true story to remind people that there is still hope out there."
For many ranchers hope is found within their neighbors and friends, said David Ollila, SDSU Extension Sheep Field Specialist and a sheep and cattle producer from Newell.
"This situation is certainly disheartening and sad, but the spirit of the American rancher lives on. Ranchers are resilient people and will do what needs to be done," Ollila said. "Within the ranching community we are helping each other and doing what needs to be done. Working together to help our neighbors regardless of how financially hurt we are."
To learn more about how the blizzard impacted South Dakota livestock producers, visit iGrow.org. To donate to the Rancher Relief Fund, visit iGrow.org and link to the Rancher Relief Fund. For assistance or to volunteer, call 211 or 1-877-708-4357 to reach the Volunteers
Organized Against Disaster.