Drought in Southwest states boosts Yampa Valley agriculture
October 20, 2011
Steamboat Springs — The misfortune of farmers and ranchers in the American Southwest is creating positive market conditions for their counterparts in the Yampa Valley.
"Both beef and hay prices are up," Alpine Bank President Adonna Allen told a gathering of business people in Steamboat Springs this week. "Unfortunately, it's at the misfortune of farmers and ranchers in Texas, Oklahoma and Arkansas where they are experiencing extreme drought."
Allen was speaking during the Business Outlook Breakfast hosted by the Steamboat Springs Chamber Resort Association on Tuesday. Allen said livestock producers in those arid regions who are struggling to feed their cattle are taking the logical step of reducing their herds. Beef prices are up despite the fact that the reductions are putting more beef on the market in the short term. Over the long term, she said, the reductions will cause a relative shortage of beef, further propping up prices.
Livestock producers in the Southwest who are intent on preserving their herds also are boosting the price of Routt County's grass hay. Allen said current prices are in the range of $100 to $150 per ton.
"A lot of hay is being sold directly or brokered to the South," Allen said.
Hay prices typically vary with the protein quality of the hay as well as the size of the bales.
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Lower Elk River Valley rancher Mary Kay Monger said she has observed even higher hay prices than what Allen reported.
"I don't think you can find anything for $100 unless it's moldy or bad hay that should probably be burned," Monger said. "We've seen hay selling for $140 to $200."
In September 2010, local hay producers were getting $130 per ton.
Monger said she knows hay has been shipped out of the valley for as much as $180 and $190 per ton, but she and her husband, Larry, won't sell it at that high a price.
"We couldn't bring ourselves to charge that much to people in our own industry who are struggling," she said. "They're getting government assistance to buy the hay, so it's almost like you're selling it high and paying for it with your taxes."
Monger said her ranch is selling hay to a feedlot operator who in turn is reselling some of it to other feedlots.
"All of ours is going to New Mexico and Oklahoma," she said.
The cost of shipping hay all the way to New Mexico is another factor.
"We're having trouble getting tracks," Monger said. "A lot of truckers are charging more than the hay is worth itself."
With the drought in the Southwest, many of the ranches in Texas can't afford to truck in hay for large cattle herds and are reducing herd sizes by selling them or slaughtering the animals.
The size of the national beef herd already was in decline throughout much of the past five years and is likely to continue to decline now, Monger said.
Small cattle operations in the Midwest, where hay is more readily available, have been adding to their herds in anticipation of escalating beef prices, according to published news stories. However, Monger said the price of beef on the hoof for Colorado ranchers who might want to add to their herd hasn't changed appreciably.
"The price of cattle really hasn't come down that much," she said. "And the price of fuel and tractor parts, especially parts, is really up."
Tracy Barnett, of Mainstreet Steamboat Springs, asked Allen what the barriers are to Northwest Colorado consumers receiving more access to locally produced beef. Allen said the only U.S. Department of Agriculture-certified slaughterhouse in the region, Brothers Custom Processing, could not meet the demand if most local residents switched over to beef raised in the Yampa Valley.
"The standards are extremely high for USDA, and it's cost-prohibitive," Allen said. "That's something we talked to Colorado Commissioner of Agriculture John Salazar about."