Colorado ranchers struggle to survive drought

LOMA, Colo.—A group of black-coffee-drinking cowboys wearing ten-gallon hats gathered last week at the Western Slope Cattlemen's Livestock Auction house. Waiting inside a crowded diner for the sale to begin, they watched a light rain wash dust off the pickup trucks outside. The unusual sight raised cautious hopes that a crushing drought, which spread across 60 percent of the country this summer, might finally be breaking.

"It's a good sign," said Gary Reed, owner of a small cow and alfalfa operation near the Utah border. He noted that the auctions in Loma had been busier than usual over the summer as ranchers—faced with parched pastures and hungry cows—are selling their coveted calves to feedlots a month ahead of schedule rather than let them starve.

"There's a lot of guys coming off the mountain early," Reed said.

Over the range in Denver, President Barack Obama and Mitt Romney, facing off in their first debate on Wednesday night, will most likely exchange barbs over tax returns, the fiscal cliff and Medicare. What they probably won't talk about are the pressing issues important to thousands of ranchers who help form the backbone of Colorado's economy: a devastating drought, a shrinking cattle industry and the high cost of hay.

These issues are forcing ranchers to cull deep into their herds. They're selling, in addition to the calves, valuable mother cows and those slightly over the hill to slaughterhouses because they can't afford to keep them. Colorado ranchers admit their counterparts in Texas and Oklahoma have it even harder—they're facing their second drought year in a row. Some Texan and Oklahoman ranchers were forced to liquidate their herds altogether, helping to drive the domestic cattle herd to its smallest size—97.8 million head —since the Department of Agriculture began keeping count in the 1970s.

The drought has also helped raise the average price of a pound of ground beef to $3.45 in August, up 18 percent from two years earlier, worrying ranchers that consumers might look for alternatives if it keeps rising.

The drought follows several decades of contraction and consolidation in America's cattle industry, increasing the concerns of small, independent ranchers that they'll be put out of business.

Colorado's ranchers, however, are no strangers to the cruelties of Mother Nature.

Greg Gipp, a burly stockbroker turned cowboy who runs about 150 cows on his family's 400-acre ranch in Collbran, Colo., says dealing with natural disasters like this year's drought comes with the territory. His family has survived two floods and the blistering 2002 drought in their 47 years on Buzzard Creek Ranch.

Gipp remembers watching a flood eat up his land 25 years ago. "It's the most sickening thing to see your land be washed away. Literally washed away. Six feet would fall in the creek," he said.

But this year's drought, thanks to its vast size, is different.

Once cows have eaten what's left of the desiccated pastures, the only option for ranchers is to buy them hay or some other feed. But the drought has damaged crops all over, driving up hay prices, for instance, to double what they were in 2010. A ton of hay costs as much as $400 in Colorado, making the option far out of reach for many.

(This has helped Reed, the rancher who grows alfalfa, a high-quality feed. "I feel like Jesse James when I tell someone I'll charge them $200 a ton," he said. In 2010, a ton of alfalfa went for a little over $100.)

Many ranchers don't have feed costs in their budgets, and needing to buy it can push them over the edge.

Mike Callicrate, a rancher in Colorado Springs and St. Francis, Kan., said, "You don't buy hay to feed a cow and stay in business very long."

Gipp grows his own hay, but this year the crop died and he lost $80,000 on it. One of his multiple hay barns was completely empty and, during a tour of his ranch, he stood in front of it mournfully. "That's what I got," he said. Another of his barns, thankfully, is still full. And he's hoping it lasts him through the winter.

In the meantime, Gipp is keeping a close eye on his stash.

"We've had people actually back up to that barn and roll a bale of hay and steal it on a flatbed truck," he said. "Hay is like gold, so we generally lock those gates."

Zane Odell, a fourth-generation rancher who keeps his cattle in Rico, Colo., and Bluff, Utah, said he's culling 25 percent of his 200-cow herd to stay afloat, rather than trying to borrow money for feed.

"A cow will not pay for a bale of hay," Odell said.

To scrimp on feed, ranchers are selling those lucrative calves to feedlots before their time. By weaning them earlier and selling them off, they're offering lighter calves for less money than if they'd waited.

Worse, though, is the selling of the mother cows. Without breeders, a rancher is really in trouble.

"I've seen grown men cry," Odell said of people forced to sell these female cows, called "replacement" cattle. He said it took until last year for the number of cattle in Colorado to fully rebound after ranchers sold off mother cows or got out of the business altogether during the 2002 drought.

"I seen this guy who was probably fifth-generation, and he was selling his replacement cattle," Gipp said of one recent jaunt to the Loma sale barn. "To see him sit there … my heart went out to him."

Gerald Schreiber, the president of the Colorado Independent CattleGrowers Association, said most Colorado ranchers have not been driven to that point, but the worst may be yet to come. "People have used their summer range really hard," said Schreiber, who was recently forced to cull his own herd from 250 to 150. "I don't know how they're going to get through the winter. It's the tip of the iceberg, I'm afraid."

Meanwhile, some ranchers worry about the larger structural changes in the cattle industry that they say have made it harder for smaller businesses to survive.

Adjusted for inflation, the average price a rancher gets per pound of beef has dropped significantly since 1980, while fuel costs have soared. More than 40 percent of ranchers have left the business over the same period.

Gipp says there's no way he could get into the business now if he didn't already own the land and the farming equipment, which costs hundreds of thousands of dollars. "It'll eat your lunch," he said.

Callicrate, the Colorado Springs rancher, says independent ranchers are being chased out of business as the industry consolidates further to maximize profits. "We're losing our cow herd, and we're going to become more and more dependent on imported meat," Callicrate said. "We're losing our communities, they're emptying out."

Schreiber, the cattlegrowers' association president, also worries about the fate of the little guy in the future. "If you're not super big then you can't be in the business," he said. "Beef has been the last bastion of independent producers, and these droughts just further the process of people getting out."