Managing Livestock For Drought

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Managing Livestock For Drought

• By Rod Sharp
• And Dennis Kaan
• Colorado State University
• Cooperative Extension

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Drought and Livestock

• No good strategies-all are expensive
• Should extend cattle cycle

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Down ½ percent in 2002
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Drought Throughout Colorado

• Topsoil Moisture
• 63 percent of state very short
• 32 percent short
• 5 percent adequate
• Subsoil Moisture
• 70 percent very short
• 24 percent short
• 6 percent adequate
• Week ending June 2, 2002

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Crop Reports 6/2/2002Colorado

• Pasture and Range Conditions
• 52 percent very poor
• 28 percent poor
• 18 percent fair
• 2 percent good

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Crop Reports (2001 5 yr. Avg.)Colorado

• Pasture and Range Conditions
• 52 percent very poor (0 percent, 2 percent)
• 28 percent poor (7 percent, 6 percent)
• 18 percent fair (30 percent, 30 percent)
• 2 percent good (57 percent, 54 percent)
• Week ending June 2, 2002

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What are your options?

• Truck cow/calf pairs to grass
• Feed (drylot) at home
• Sell and buy-back
• Early wean calves, sell and buy-back cows

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Typical Partial Budget

• Positive Outcomes
• Reduced Costs
• Increased Returns
• Total Positive Impact

• Negative Outcomes
• Reduced Returns
• Increased Costs
• Total Negative Impact

Positive-Negative Net Impact
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Truck to Grass-Key Factors

• Availability of Grass
• Transportation Costs
• Pasture Lease Rates
• Death Loss

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Availability of Grass

• Scarce
• At least 400-500 miles away
• Kansas-95 percent contracted (mid April)
• Nebraska-Some available - 22-32 per AUM

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Very Dry
Adequate but no excess
Abundant Forage
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Truck Pairs to Grass

• Assumptions
• 250 cows, 45 replacements
• Transport 500 miles one-way
• 1.50 per loaded mile
• 30 pairs per load
• Pasture Rent-20/AUM (3 months)

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Transport To Grass

• Trucking Costs
• Cow/Calf Pairs (8 Trucks) 12,000
• Replacement Heifers (1 Truck) 1,500
• Pasture Rent
• 250 Pairs 15,000
• 45 Replacements (.9 AUM) 2,430
• Net Impact -30,930
• Per Cow -124

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Truck to Grass-Key Factors

• Availability of Grass Scarce
• Transportation Costs Expensive
• Pasture Lease Rates High
• Death Loss

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Buying Feed-Key Factors

• Availability of Feed
• Feed Costs
• Transportation Costs
• Labor Availability

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Buying Feed-Assumptions

• Same Cow Herd
• Drylot Pairs for 3 months
• Feed Costs
• Alfalfa Hay - 100 per ton
• Straw - 60 per ton
• Corn, grain - 4.46 per cwt.
• Corn, silage - 30 per ton
• Barley - 5.00 per cwt.
• Cake Protein - 0.50 per lb.
• Tub Protein - 1.26 per lb.

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Ration 1 Alfalfa, Straw Protein

• 14 lbs. Alfalfa Hay 15,750
• 10 lbs. Straw 6,750
• 1 lb. Cake Protein 11,250
• Total Cost 33,750
• Per Cow 135

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Ration 2 Straw, Barley Protein

• 12 lbs. Straw 8,100
• 7 lbs. Barley 7,875
• 2 lbs. Cake Protein 22,500
• Total Cost 38,475
• Per Cow 154

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Ration 3 Straw, Corn Silage Protein

• 12 lbs. Straw 8,100
• 40 lbs. Corn Silage 13,500
• 2 lbs. Cake Protein 22,500
• Total Cost 44,100
• Per Cow 176

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Ration 4 Corn and Alfalfa Hay

• 12 lbs. Corn, grain 10,800
• 5 lbs. Alfalfa Hay 5,625
• Total Cost 16,425
• Per Cow 66

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Liquidation of Livestock-Key Factors

• Sale Price-Cow/Calf Pairs
• Buy-back Price-Pairs
• Tax Implications
• Genetics

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Liquidation of Livestock-Assumptions

• Same Cow Herd
• Sale and Buy-Back Price-750 per pair
• Marketing/Trucking Costs-32 per pair
• Interest Income-9 months _at_ 6
• Reduced Expenses-230 per cow
• Lost Sales (Calves Culls)-314 per cow

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Liquidation of Livestock

• Positive Impacts
• Sales-pairs 187,500
• Expenses 57,500
• Interest Income 8,438
• Total Positive 253,438

• Negative Impacts
• Marketing 5,000
• Trucking 6,000
• Buy-Back 187,500
• Reduced Returns 78,539
• Total Negative 277,039

Net Impact -23,601 Per Cow -94
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Liquidation of Livestock- Cows 50

• Positive Impacts
• Sales-pairs 187,500
• Expenses 57,500
• Interest Income 8,438
• Total Positive 253,438

• Negative Impacts
• Marketing 5,000
• Trucking 6,000
• Buy-Back 200,000
• Reduced Returns 78,539
• Total Negative 289,539

Net Impact -36,101 Per Cow -144
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Tax Implications-Section 451 E

• Income from sale of livestock due to drought
• (Postponed being reported for one year)
• Farming/Ranching Principal Business
• Cash Method of Accounting
• Sale would not normally have occurred
• Area designated as eligible for Fed. Assistance
• Must be made by the due date of the tax return
• Attachment to tax form-information about the sale

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Tax Implications-Section 1033 E

• Involuntary Conversion
• (Reporting the gain can be postponed for two
  years, if the taxpayer purchases replacement
  livestock within two (2) years.)
• Evidence that drought forced the sale
• Replacement livestock must be for the same
  purpose
• No declaration of disaster area needed

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Early Wean Drylot Calves, Sell Cows

• Same Cow Herd
• Sell Cows-600 per cow
• Buy-Back Pairs-750 per pair
• Marketing/Trucking Costs-30 per Cow
• Interest Income-9 months _at_ 6
• Reduced Expenses-230 per cow
• Lost Sales (Culls)-56 per cow

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Early Wean Sell Cows

• Positive Impacts
• Sales-cows 150,000
• Expenses 57,500
• Interest Income 6,750
• Total Positive 214,250

• Negative Impacts
• Marketing/Truck 8,000
• Feed Calves 10,109
• Buy-Back 187,500
• Reduced Returns 14,000
• Total Negative 219,609

Net Impact -5,359 Per Cow -21
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Quick Comparison of Alternatives
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Remember
USE YOUR OWN NUMBERS
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Call if You Need Help

• Dennis A. Kaan
• 181 Birch
• County Courthouse Annex
• Akron, CO 80720
• 970-345-2287
• Dennis.Kaan_at_ColoState.EDU