The drought that has hit the southern part of the state is slowing the growth of nearly recovered cattle herds that were devastated three years ago.
As the drought diminishes grazing areas, farmers are feeding hay to their cattle that they normally save until winter. Soon farmers will have to either cull herds or dip into profits to buy hay to feed cattle until spring.
"We are on the cusp of decisions that need to be made," said Travis Justice, chief economist for the Arkansas Farm Bureau and executive director of the Arkansas Beef Council. "If it continues much longer, particularly through the fall and winter, farmers are going to have to decide if they can feed them until next March."
Farmers are trying to rebuild herds that were depleted in a drought three years ago. In 2012, a drought doubled the price of hay and herd sizes fell as farmers were forced to send heifers to slaughter instead of breeding them. That drought drove up the price of beef.
Justice said farmers in the state added 40,000 head of cattle this year. But that number could fall next year if rain doesn't fall soon.
Robin Bridges, a Union County extension agent for the University of Arkansas's Agriculture Division, said farmers have already started buying hay or culling herds in his area, which is in the part of the state most heavily affected by the drought.
"They were starting to retain some good quality heifers to try to work into their management program. They were reinvesting in their barns and their watering facilities," he said. "The strong market for the last three to four years has really done a lot to boost their expectations for possible profits, so this is totally unexpected."
The National Drought Mitigation Center at the University of Nebraska-Lincoln said earlier this week that 62.8 percent of the state is in some type of drought.
Parts of Union County are in an "exceptional" drought, which means that there is widespread crop or pasture loss, according the the National Drought Mitigation Center.
Justice said beef prices shouldn't be affected unless the drought continues and spreads. Beef prices are determined by the overall supply and demand across the country, he said.
"The drought area is not one of your highest cattle populations in the region," he said. "If this was in Northwest Arkansas, then you've got some more potential reaction there. The overall price level is going to be determined by demand across the country."
Union County has an inventory of 6,900 cattle, according to the Arkansas Farm Bureau.
Northwest Arkansas counties are the major beef producers in the state. Benton County has 90,000 head of cattle and Washington County has 98,000, according to the Farm Bureau.
"If I am the one impacted, it's a disaster," he said. "But for the industry overall, it's fairly moderate."
Beef prices are the slowest to rebound from droughts because the animals take longer to reproduce. Cattle also are more vulnerable to weather conditions because they spend most of their lives outside.
Bridges said farmers have been putting out fertilizer and winter feed to help them until spring in case the drought ends soon.
"For the most part, the ranchers are continuing to manage," he said. "They all have hope that we are going to get some rain before too much longer and everything's going to be just fine. Like most farmers anywhere in the country, you put your faith where it belongs and you continue to try to manage until things turn around."
Business on 10/10/2015