Migration brings consolidation | Texas has taken in more than 47,400 cattle and ‘the sell-off is not over yet,’ says official
(Reuters) — For decades, ranchers from the east have brought their livestock to California, where mild winters and lush natural pastures created prime conditions for fattening beef cattle.
The grass is stunted and some creeks are dry in the midst of the worst California drought in decades.
Ranchers in the Golden State are loading tens of thousands of heifers and steers onto trucks and hauling them eastward to Nevada, Texas, Nebraska and beyond.
“If there’s no water and no feed, you move the cows,” said Gaylord Wright, owner of California Fats and Feeders Inc. “You move them or they die.”
The exact head count for livestock on this cattle drive is not known, but a Reuters review of state agriculture department records filed when livestock cross state borders indicates that up to 100,000 California cattle have left the state in the past four months.
California has shipped out cattle before, but the current migration is far bigger and includes more of the state’s breeding stock, said Jack Cowley, a rancher and past president of the California Beef Cattle Improvement Association.
It could be doing outsized damage to the nation’s 18th-largest cattle herd because California ranchers will have difficulty rebuilding once the drought breaks, said cattle ranchers and area livestock auctioneers.
“We spend a lifetime building the herd the way we want,” said Cowley.
“Now, we’ve lost all that.”
Two weeks ago, he sold 18 percent of his breeding herd, or 200 cattle, to an operation in Nevada because he did not have enough water.
He expects he will need to sell another 200 cattle.
Beef prices are already are at record highs, and increased transportation costs and rising uncertainty about where and how many future cattle will be raised and processed are adding upward pressure, industry analysts say.
The national cattle herd is at a 63-year low because high grain prices and drought during the past several years have encouraged producers to send animals to slaughter early and reduce herd sizes.
There are some signs of change.
Producers have started holding back breeding heifers and female calves from the slaughterhouses in places where the drought has eased or where ranchers are willing to gamble that rain will fall, according to government data. However, they are also buying California cows.
The California exodus underscores a little-noticed development in the U.S. beef industry: the evolution of an increasingly mobile livestock herd, which must travel ever-greater distances to feedlots and slaughterhouses as the industry consolidates.
The last major slaughterhouse near the California-Mexico border, National Beef Packing Co.’s plant in Brawley, Calif., plans to close May 23.
The company said the drop in available cattle sparked the move, and some ranchers in southern California say they will need to cross state lines to reach the next-closest packing house.
The Brawley plant could process 1,900 head of cattle a day, or about two percent of U.S. slaughter capacity, according to industry analysts.
However, feedlots are closing in the region, and the plant couldn’t be assured of a steady supply of livestock.
“The fact is, this migration cycle is going to bring about even more consolidation,” said Curt Covington, senior vice-president for the agricultural and rural banking division at Bank of the West.
“Unless you see Noah come out to California with a boat, you’re not going to see these cattle come back here any time soon,” Covington added.
State government paperwork provides insight for tracking cattle trailers as they cross state lines.
The top destination appears to be Texas, long the nation’s largest cattle producing state. Buyers this year have hauled in more than 47,400 California cattle, a 71 percent jump over the previous year’s first quarter, according to state agriculture department data.
“Some of our California cows are going to be Texans. There’s no way around it,” said cow-calf producer Tim Koopman, president of the California Cattlemen’s Association.
“The sell-off is not over yet.”
Nebraska, home to more cattle in feedlots than any other state, has also joined in. More than 14,000 California cattle arrived in the first quarter of this year, compared to just 542 cattle that made the trek in the same period last year, according to state records.
Many of the cattle crossing state lines are doing so at lighter weights than normal because of scarce water and high feed prices.