Drought Hits Arkansas Cattle Industry Hard

University of Arkansas researchers say that this summer’s drought had an estimated $128 million negative impact on the state’s cattle industry, but the number is certain to climb.

According to a newly released study, “Estimate of Economic Impact of Drought on Commercial Beef Cow/Calf Operations in Arkansas,” Arkansas beef cattle ranchers altered their herd management, land use, and spending income.

The study noted:

• 73 percent would sell their calves earlier than in a typical year
• 49 percent had reduced their herd size by selling more mature cows than usual
• 41 percent planned to sell more mature cows this fall

Other production changes included:

• 40 percent said they would apply more weed control to allow grasses on pastures to recover better than if weeds were competing
• 3 percent said they would sell all their livestock
• 76 percent were feeding extra hay and supplements
• 18 percent were bringing in water from off-farm sources

The study’s authors cautioned that the $128 million figure “should be deemed a conservative estimate of the direct economic impact of the drought on cow-calf producers’ income.”  When induced impacts are calculated, the numbers increase to $133 million in labor income losses and a $136 million loss in value added.

UA researchers released a preliminary report last month that showed the drought’s impact on Arkansas row crop production was minimal compared with other states.

The study was conducted by Dr. Michael Popp, University of Arkansas professor of agricultural economics; Nathan Kemper, trade adjustment assistance program coordinator for the Southern Risk Management Education Center; and S. Aaron Smith, a Ph.D. student at the University of Arkansas.

“It was important to help the beef cattle industry quantify its losses,” said Popp. “Getting a handle on the reasons and the costs is the first step to helping the industry recover.”

RIPPLE EFFECT
The $128 million in cow-calf losses could also ripple into other industries, according to the report.

“The health and social services industry experienced the most income and value added losses due to induced impacts,” Kemper said. Those were followed by retail trade, finance and insurance, wholesale trade real estate and rental.

“When cow-calf farmers lose income, that translates into fewer dollars being spent back into the local economy buying groceries and clothes and eating in local restaurants. It also means fewer trips to the doctor and dentist for those farm families,” he said.

Kemper calculated the total loss in labor income to those other industries at $4.4 million. Value-added losses were pegged at $8.1 million.

“In rural communities where the cow-calf sector makes up an important part of local economic activity, the impacts to main street businesses are substantial,” said Kemper.