Drought overshadows other problems in the ranching industry
The pandemic threw many industries into a tumultuous and uncertain time. This wasn't any different for Wyoming's stock growers industry. But then Wyoming entered a pretty severe drought. Wyoming Public Radio's Kamila Kudelska sat down with the executive director of the Wyoming Stock Growers Association, Jim Magagna, to understand how these outside factors have and will impact the industry.
Jim Magagna: Well, first of all as COVID hit, what we saw was a real wake up for us was really back in early spring of 2020, when the price of boxed beef that was going to the retailers and the restaurant users went up by double in a mere matter of two weeks. And at the same time, the prices that our producers received for live cattle declined by about 30 percent. So that was a real wake-up call to us.
Kamila Kudelska: And when you say that you were awakened to that or the industry was awakened to it, you mean that this was a problem that was existing already, and it kind of just got exasperated from COVID?
JM: I do. I think that over a period of really the last 40 years, as the beef processing industry became more concentrated, and what we refer to today as "The Big Four" that control about 85 percent of the processing, they really became the giant in the marketplace that could drive what happened, happens on both ends in terms of prices that retailers and foodservice establishments have to pay for their product. And certainly in terms of the prices that our producers are being offered and how that comes down to the feeders and the finishers, and finally down to our cow-calf producers. We were aware that that was an issue, but it became more dramatic when we saw what happened because of COVID. And they had the opportunity to dramatically raise the prices of boxed beef. So in that sense, it was a wake-up call for us and one that's been a positive for our industry, because to use the terminology of you awaken the sleeping giant, I think we're not easily going back to sleep on that issue now without having it addressed.
KK: And can you go into a little more detail of how y'all are focusing on that issue and how potentially COVID money, federal money has helped with that?
JM: In terms of focusing on the marketing challenges that are caused by the power and control of the big four, I don't know that COVID money has been a factor that I'm particularly aware of. It's more looking at government, government policies, trying to work with those people to achieve some greater transparency in the marketplace for finished cattle. And to the extent that we're not able to achieve that looking at Congress and the government for some assistance there. We were very involved both nationally, and we as Wyoming Stock Growers, in calling on the Department of Justice conducting an investigation into those operations. And whether they were violating any restraint of trade, or laws or that in what they were doing. We still haven't heard any feedback from that, I believe it's still kind of ongoing. And that's been a little bit frustrating to us that after a year and a half, we still haven't seen anything on that side. But we continue to look at that anyways.
KK: Obviously, there's weather impacts to the industry. And drought has kind of really become pretty bad in the past year or two. So I just wonder if you can kind of go into some detail of how the industry has been impacted by that?
JM: Certainly the drought is the issue that has overshadowed all of the others. In the last six months in particular, we didn't get adequate snowpack in our mountains in much of the state this past winter. And we've had very minimal amounts of spring, summer rainfall except where I am today down in southeastern Wyoming. This area down here was rather fortunate. And that's had perhaps the most significant in a sense as a long term impact, because it's forced a number of our producers to actually sell off hits of livestock, numbers of cattle, which is not just the impact this year, this year, because prices have been relatively good. They may have gotten a significant return off of those animals. But those were in the cow-calf business, if they sold off some of their breeding animals, the impacts of that are going to be felt on their operations and on the industry as a whole for several years to come. Even if we were to be fortunate enough to get a significant turnaround in the weather pattern in 2022 and beyond.
KK: And what are the concerns for the industry if this drought continues for another year or two? I mean, it already seems like we're not getting enough snow this year so far.
JM: That's really a serious concern. I was just on the phone a short time ago with a producer in northeastern Wyoming. He predicted that in that area of Wyoming, ranchers have sold 30 percent of their livestock. Now that even shocked me, I thought, perhaps 15 to 20 percent on a statewide basis, I hadn't realized that it might be as high as 30 percent in some of the drought areas of the state. And we were both commenting on the fact that that's based on one year, well, two years of drought, but one year of extremely severe drought. If we were to have another year like 2021, in 2022, I could see another 30 percent or more. I could see numerous producers who would just say, 'This is no longer sustainable to have a ranching operation, I'm going to sell my livestock.' And maybe the next step is, then I sell my ranch, because the one thing that is a positive…real estate values on ranch land in Wyoming are extremely high at this point in time but the market isn't other ranchers who are going to expand their operation, the market are other interests who want to acquire those ranches for their recreational values, for their hunting values, not to manage viable ranching operations. So if that were to happen, the impact could be something that is virtually permanent on the agricultural industry in the state of Wyoming.
KK: Any thoughts on solutions to combat that, to help the situation if it were to be another really bad drought?
JM: Well, solution number one is pray for rain moisture. But beyond that, I mean, there are some assistance programs and the government has been fairly good in providing emergency assistance in scenarios like drought, that can help you get through a drought, if you can see the bright spot at the other end. But if the evidence is that this is a continuing cycle, that we're going to experience multiple years of drought, I really don't think there are any answers. I mean, there's in individual cases, there can be, we've been very active here at Wyoming Stock Growers with our stock growers land trust. When we have funds available, purchasing conservation easements, that helps to assure that those lands remain viable for agriculture. Even if they go out of actual production for a year or two, they're not going to become subdivisions or something else that no longer welcomes cows onto the property. But so some of those things can help slightly, but unfortunately, I don't see a really sound long-term answer without the ability to get the moisture that we need.
KK: So it sounds like this could dramatically impact the industry in Wyoming.
JM: It could, I mean, I'm an optimist. So I always see the bright spot ahead. But that bright spot looking ahead for our industry is going to be heavily dependent on getting an adequate amount of moisture in '22 and beyond for the next four or five years. There's a limit to what we can do as an industry to address that. I mean, here are changes we can make in our operations. And ranchers are making those constantly to adjust to drier type conditions, whether it's leasing extra pasture, reducing livestock numbers, just changing how you use the resources that you have available. There are some tools out there, it's not that we're without them. But droughts such as we've experienced in so much of the state, this current year, if it were continued for two or three years, those tools proved to be totally inadequate. And I don't know if there's really an answer to that. I mean, some government programs can assist with some dollars in the short term, but longer-term conditions either have to allow you to make your ranching operation economically viable and sustainable, or you no longer continue that operation.
KK: So it could really change, kind of the framework, of how Wyoming works because I mean agriculture is….
JM: It really could if this drought became an ongoing phenomenon, part of our future. Now, in the past, if you look back in history, we've survived two or three-year droughts in the past that were very severe. And I think we still have the ability to do that today. And we have more tools to work with than we did back in the 40s or 50s. But nevertheless, there is a limitation there that nothing that we as an industry can do or the government can do can finally begin to address that.