Scrambling to survive
In parched West Texas, some large, old-line ranching families have mobilized to preserve the core of their genetic seedstock by moving their best young cows as far as 1,000 miles north to Montana, Colorado, Nebraska, South Dakota and Wyoming. Spade Ranches of Lubbock normally keeps cows in production for 10 years. This year, it sold most of its eight- and nine-year-old cows to ranchers in Arizona, California and Mississippi, cutting its herd of 6,400 mama cows to 4,000.
The ranch also usually retains its bred-heifer crop, but sold them to producers in Colorado and Wyoming. Spade is now moving 1,000 young, most-productive cows to the North.
“Our thinking is to get off of these ranches and let the country recover,” says CEO John Welch. Welch and the majority of other area ranchers moving animals out of state plan to bring their stock back to Texas in a year. But, some are striking long-term leases, using the opportunity to expand north and perhaps restock their Texas herds by bringing heifer calves back or through cattle purchases.
Under less severe past droughts, ranchers would cull their herds and secure lease pasture within 200 miles. But this year’s drought is so widespread that good grass isn’t available south of northern Kansas to northern Colorado. All told, some 5,000-7,000 cows in the Lubbock region are being moved north.
The relocation of Southern Plains cattle north due to drought and the ongoing conversion of pasture to row-crop land in the eastern Plains has firmed up pasture lease rates in the Northern Plains. Where some Nebraska pastures went unleased last year due to a surplus of lush pasture, all leases are taken up this year, reports Cort Dewing, director of field operations with the Nebraska Board of Educational Lands and Funds, which manages 951,686 acres of pasture leases.
“We’re in a healthy environment for pasture and the value of it should be good because the cost of gain in the feedlot is high,” Dewing says. Lease rates in north central Nebraska – Brown, Rock, Keya Paha and Cherry counties – are running at $35-$40/cow-calf pair/month.
Across the Sandhills, rates range from a high of $41/animal unit month (AUM) in the eastern Sandhills to a low of $16/AUM in the west, says Ron Vance, field supervisor with the state land board. The agency plans to raise 2012 lease rates from 7.5% in the eastern Sandhills to 2.5% in the west.
In neighboring Kansas, quality bluestem pasture is selling at $1,200-$1,400/acre, says Richard Griffin, with Griffin Real Estate and Auction Service in Cottonwood Falls. Prices rose last spring from a $1,000-$1,200/acre band where they had traded since 2009.
The drought has given cattlemen a sense of urgency to add to their land bases beyond the moisture-stressed Southern Plains, Griffin says. In June, a Texas rancher paid $1,400/acre for 1,991 acres of bluestem pasture on the eastern edge of Marion County. Meanwhile, net lease rates to landowners in the Flint Hills region are running $24-$26/acre for the April 15- Oct. 15 grazing season. That’s up $2-$3/acre from a year ago, Griffin says.
Mike Fritz is editor and publisher of Farmland Investor Letter. Reach him at firstname.lastname@example.org or visit www.farmlandinvestorcenter.com.