Arkadelphia News

Drought, inflation strain farmers, who see little relief in sight

By Tess Vrbin | Arkansas Advocate

Billy Grace, a Saline County cattle farmer, sold a portion of his herd this summer for the first time in 19 years in the business.

High fertilizer prices and intense drought conditions have made it difficult for Arkansas farmers like Grace to grow, buy and sell hay this year. 

Grace sold 60 animals because he could not afford to feed a herd of nearly 200, mostly due to the price of fertilizer, he said.

Grace plans to keep farming cattle just southwest of East End, but some observers worry other farmers won’t stay in an industry that’s been put in a bind due to a months-long dry spell in much of the state.

A loss of ranchers would be a blow to a business that brings the state over $500 million per year, said Cody Burkham, executive vice president of the Arkansas Cattlemen’s Association.

“People are having to make tough decisions, either liquidating or reducing their herd sizes,” Burkham said. “We have heard of a number of producers just selling out completely. They just can’t justify continuing on with the input costs as high as they are.”

Cattle ranchers in northern and western Arkansas are dealing with a feed shortage, and row crop farmers in east Arkansas are struggling to keep their fields adequately irrigated, according to state agriculture officials and local cooperative managers.

Abnormally high fuel prices also have exacerbated the costs of shipping water, hay and grain.

Overall livestock and row-crop production is expected to take a hit this year, and cattle farming experts anticipate further fallout next year when reduced supply will drive prices up.

The University of Arkansas System Division of Agriculture released a report Aug. 4 that estimated an average loss of nearly $97 million in the state’s hay and forage production this year due to the drought. The total value of hay and forage production under normal conditions is about $539 million, the report states, totaling an 18% overall production loss.

The long-term economic impacts on the state and its farmers remain to be seen but are expected to hurt, said James Mitchell, a livestock economist with the UA System Division of Agriculture and one of the authors of the report.

“Producers in Arkansas and across the country spend years and years and lots of money fine-tuning the genetics of their herd to fit their specific operation, to fit a product that consumers want, and so you’re losing that when you have to sell off all or some of your cows,” Mitchell said.

All 75 Arkansas counties experienced abnormally dry or drought conditions in July. As of Aug. 9, parts of northeast and southeast Arkansas had returned to normal conditions, according to the U.S. Drought Monitor at the University of Nebraska. Southwest Arkansas, including Texarkana, and part of Northwest Arkansas were both experiencing “extreme” drought conditions.

Relief for much of the state is probably far off.

Texarkana and Hot Springs each received less than an inch of rain in July, said John Lewis, a forecaster with the National Weather Service’s Little Rock office. He said the drought is unlikely to subside in the immediate future.

“You’re going to get rain from time to time, but the pattern suggests that it’s going to hold on for a while,” Lewis said.

“It’s been a very unlucky year.”

— Billy Grace, Saline County cattle farmer

In July, Gov. Asa Hutchinson asked the U.S. Department of Agriculture to issue a statewide disaster declaration for Arkansas so affected farmers could apply for federal assistance.

U.S. Agriculture Secretary Tom Vilsack designated four north Arkansas counties — Baxter, Fulton, Randolph and Sharp — as a “primary natural disaster area” on July 29. The four counties had experienced “severe,” “extreme” or “exceptional” drought conditions for at least eight weeks, according to the Drought Monitor.

Farmers can apply for aid at their local Farm Service Agency offices if they are located in the four disaster area counties or the eight contiguous ones: Clay, Greene, Independence, Izard, Lawrence, Marion, Searcy and Stone counties. Farmers in four southern Missouri counties that border the four in Arkansas are also eligible for aid.

As of Tuesday, the FSA offices that serve the eligible counties have not received any applications, according to an email from the FSA director at the state’s U.S. Department of Agriculture office.

The last statewide drought that had such an impact on farmers was in 2012, when most of the state saw “extreme” or “exceptional” drought conditions, Lewis said.

Older farmers who have been raising cattle for decades might choose to leave the industry after experiencing multiple droughts, said Patrick Fisk, director of the Arkansas Department of Agriculture’s livestock and poultry division.

Burkham agreed that the drought could cost Arkansas a large number of cattle producers.

“Most of the time, those producers that get out of the industry — some of them will get back in when the rains come back and things improve, but a lot of those that get out will not come back,” Burkham said. “It just costs too much to get back into the industry once you’ve already gotten out.”

Farmers who sold their livestock this year and want to remain in the industry might have trouble replenishing their herds next year because low supply and high demand will drive prices up, said Danny Naegle, CEO of the Little Rock Cooperative Association.

“If we have a bigger selloff, the supply’s going to be less [next year] and if they want to get in, they’re going to have to pay a lot more for what they buy than what they sold,” Naegle said.

Grace said he has kept enough heifers, or young female cows that have not yet reproduced, that he will not have to buy any cattle to stay in business next year.

Cattle producers are facing a “perfect storm” of obstacles to maintaining their herds, Burkham and Fisk both said. Many farmers chose not to fertilize their pastures during spring because fertilizer prices rose alongside fuel prices, they said.

Grace said fertilizer usually costs $300 per ton but cost $900 per ton this year, and fertilizing one acre of land cost him about $100.

Both unfertilized pastures and heavy rainfall in the spring yielded between 30% and 50% less hay this year than last year, Fisk said. This meant less feed ready for cattle when the drought prevented fresh grass from growing in pastures and further impeded hay growth and harvest.

Farmers have been faced with the choice of using up feed reserves earlier than usual or taking on the expense of buying and shipping in extra hay, grain, several types of grass and other cattle feed, Fisk said.

“They were already behind on hay production and now some have to feed [livestock] early, so they’re in pretty dire situations,” he said.

Under more normal weather conditions, cattle farmers would have cut hay twice this year and would expect a third before the end of the production season in November, Burkham said.

“A lot of producers just haven’t gotten a second cut this year, [and] there will certainly be no third,” he said.

Hay currently costs between $180 and $200 per ton, twice what it would in a normal year, Burkham said.

Ranchers are also struggling to provide enough water for their herds because their ponds and reservoirs are nearly or completely dry, Fisk said.

Meanwhile in east Arkansas, farmers rely on irrigation to grow corn, soybeans and rice.

Some farmers put off planting for weeks because of the lack of rain, Lonoke County Cooperative General Manager Phillip Murray said. Keeping fields adequately irrigated is a further challenge because it takes more water and fuel to do so, and some crops have burned in the heat before farmers reach them with water, he said.

“It’s been so hot and dry that it evaporates and plants suck it up” as soon as the water hits the ground, Murray said.

Arkansas is a “surface water-rich” state but does not have the infrastructure to move large quantities of water from bayous and reservoirs to farmers that need it, said Scott Bray, the director of the State Plant Board.

Crop farmers in Arkansas use high-quality irrigation systems to maintain their fields, but pumping water can be a high input cost whether the pumps run on electricity or diesel fuel, so the increased need for irrigation this year puts a strain on those farmers, said state Sen. Ron Caldwell, R-Wynne, chair of the Senate Agriculture Committee.

“I’ve always told people that with the technology farmers have today, they can grow a good crop, but the real trick is to grow a good crop at a profit because the input costs are so high with irrigation, fertilizer, seed and fuel,” Caldwell said.

Murray said he foresees high fertilizer costs next year, and this could put a strain on farmers, but “as long as commodity prices stay up, most of them should be fine.”

Some crop farmers negotiated diesel fuel prices before the planting season started and were better off than they would have been if they had paid the rising market prices, Bray said.

However, malfunctioning water pumps have been difficult to fix this year due to supply chain issues, he said.

“It’s taken a long time to get replacement parts,” Bray said. “There’s been downtime when it comes to equipment failures, and that’s probably hurt a few people.”

Crop farmers might get some relief from the drought later this year when high air pressure moves to the west, Lewis said, though cattle farmers in west Arkansas will still have to deal with drought conditions.

“Ranchers don’t have that capability [to irrigate], so if it doesn’t rain, the grass doesn’t grow and there’s not enough hay,” Lewis said.

Grace received financial aid from his local FSA during the 2012 drought. He’s frustrated his region has not been eligible for aid this year, likely because of the sporadic rainfall in Central Arkansas throughout the drought.

“People around us got enough rain that they didn’t consider Saline County a drought area,” Grace said.

Burkham said the Cattlemen’s Association encourages farmers to apply for whatever financial help they can get.

“It will certainly help if a producer is right there on the line of deciding, ‘I could either sell out, or I could get this [money] and it could at least get me through until the rains come or maybe feed prices come back down,’” Burkham said. “It definitely could keep somebody from liquidating.”

One form of FSA drought aid is the USDA’s Livestock Forage Program. As of Aug. 12, 44 Arkansas counties were eligible for different kinds of help from this program based on the types of pastures they have been unable to grow during the drought.

Farmers in 11 of the 12 northern Arkansas counties eligible for FSA help can also apply for the Livestock Forage Program, with Greene County as the exception, according to the USDA website.

Crop farmers can enroll in the USDA’s Price Loss Coverage and Agriculture Risk Coverage programs, which Burkham said are a “safety net” that cattle ranchers do not have.

Murray said federal aid for crop farmers would not help with the increased cost of fuel itself, but it would help offset the cost of using additional fuel to transport water during the drought.

The Arkansas Cattlemen’s Association is seeking $3.5 million from the state’s restricted reserve fund for an emergency feed transportation assistance program, Burkham said. The topic did not come up during the legislature’s four-day special session last week, but it could come before the Arkansas Legislative Council later this month if Hutchinson makes a formal request in writing.

Hutchinson acknowledged the Cattlemen’s Association’s written request last week.

The requested appropriation would come before the agriculture committees in both chambers before going to a Legislative Council subcommittee for approval. 

“We’ll hear it and hopefully approve it so we can help our farmers in our state,” said state Rep. DeAnn Vaught, R-Horatio, a west Arkansas cattle farmer and chair of the House Agriculture Committee. “It’s our largest industry… We started feeding hay [to our cattle] several weeks ago.”

Early August rainfall revitalized some pastures throughout the state, but “it’s unlikely that hay production in August and September will offset the losses experienced in June and July,” according to the University of Arkansas Division of Agriculture’s economic impact report.

Grace said the rain during the first weekend of August made his pastures slightly greener and healthier, helping him feed his remaining herd, but the relief is minimal.

“It’s been a very unlucky year,” he said.

Arkansas Advocate is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Arkansas Advocate maintains editorial independence. Contact Editor Sonny Albarado for questions: Follow Arkansas Advocate on Facebook and Twitter.

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