Texas Drought Losses to Agriculture Approach $1.5 Billion

May 18, 2011

COLLEGE STATION – Preliminary estimates of Texas drought losses have reached $1.2 billion and are expected to escalate higher this year as livestock producers continue to sell off herds and crop conditions deteriorate, according to economists with the Texas AgriLife Extension Service.

By: Blair Fannin

COLLEGE STATION – Preliminary estimates of Texas drought losses have reached $1.2 billion and are expected to escalate higher this year as livestock producers continue to sell off herds and crop conditions deteriorate, according to economists with the Texas AgriLife Extension Service.

"Each day without rainfall is one in which crop and livestock losses mount," said Dr. David Anderson, AgriLife Extension livestock economist. "Even with the severity of the current drought, estimation of economic losses is difficult given that we are still early in the growing season."

Livestock losses due to drought are an estimated $1.2 billion from November 2010 through May. Those losses include increased feeding costs and lost value of wheat pasture grazing, Anderson said.

"Texas is the largest beef cow producing state in the U.S. with more than 5 million head," Anderson said. "More than 90 percent of the state's beef cows are located in counties categorized as being in severe to exceptional drought."

The ongoing drought has forced ranchers to start feeding hay earlier in the season and to increase the amount fed due to lack of pasture growth, Anderson said.

"This increased feeding cost over normal levels is a direct economic impact on the livestock producers," he said. "The sudden severe onset of the drought has forced livestock producers to purchase even more hay, driving up prices sharply."

The drought has been so severe that many stock tanks that provide water for livestock have become "dangerously low or dry," Anderson said.

"This requires even higher costs to haul water daily to meet livestock needs," he said.

The most recent U.S. Drought Monitor (http://www.drought.unl.edu/dm/monitor.html) indicates 100 percent of the state with at least abnormally dry conditions and 82 percent classified in extreme and exceptional drought.

Dr. Mark Welch, AgriLife Extension grain marketing economist, said much of the state has yet to plant spring row crops, and there is still time for weather patterns to change.

"However, for wheat, cotton and grain farmers in Central and South Texas who have planted or are facing final planting deadlines, and ranchers supplemental feeding on short pastures, each day without rainfall is costly," he said.

Welch said assuming crop conditions of 2011 continue on their current track, this year's Texas wheat production is estimated to be 34 million bushels.

"This would come off 25 percent of planted acres and an average yield of 24 bushels," he said. "High wheat prices in 2011 will offset some of the revenue lost to poor wheat yields for those farmers who still make a crop."

The total value for the Texas wheat crop this year is currently $274 million, about half of the five-year average of $555 million, Welch said.

"The low harvested percentage is compounded by several factors in addition to the drought," Welch said. "Record-high calf prices increase the value of wheat for grazing, especially if grain production prospects are poor, and record high cotton prices offer incentives for producers to terminate poor stands of wheat in hopes of producing a high value cotton crop."

Uncertainty remains in place for Texas' cotton crop, said Dr. John Robinson, AgriLife Extension cotton economist.

"Given the regular occurrence of dry weather in West and South Texas, and the late planting date in West Texas, it's not unusual to be facing uncertainty about the level and condition of cotton plantings in the state. As the West Texas crop is not usually planted until May, there's still time for conditions to change."

Corn and sorghum are lacking adequate topsoil moisture for seed germination and deeper subsoil moisture to sustain crops that are up. Nearly all of the districts in Texas have more than 90 percent of the acreage topsoil moisture rated either short or very short.

Late-planted corn is susceptible to mold infestation and aflatoxin contamination (a fungus that affects corn).

"The impact of high levels of aflatoxin range from discounts in price to the requirement to destroy the grain altogether," Welch said.

The following is a list of economic drought losses from 1998 through 2009 compiled by AgriLife Extension economists:

* 2009 – $3.6 billion

* 2008 – $1.4 billion

* 2006 – $4.1 billion

* 2002 – $316 million

* 2000 – $1.1 billion

* 1999 – $223 million

* 1998 – $2.4 billion