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Drought and Cattle: Implications for Ranchers

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Abstract

Drought has occurred with greater intensity and frequency in many areas of the United States in recent years. Despite the growing concern surrounding the impacts of drought on the agricultural sector, few studies have quantified the impact of drought on the cattle industry. In this paper, we estimate the impacts of drought on cattle herd management, hay production, hay prices, and farm income in the United States from 2000 to 2022. Our results indicate that drought negatively impacts hay production and results in higher hay prices. Drought also contributes to herd liquidation and is correlated with lower farm incomes. As drought intensity increases, we find some evidence of reduced average herd sizes (liquidation). As herd size declines, revenues temporarily increase, which could be due to selling larger quantities of market and breeding stock. Overall, drought has a temporary positive effect on rancher revenues, but a negative effect on earnings.

Suggested Citation

  • Cortney Cowley & Jacob Dice & David Rodziewicz, 2023. "Drought and Cattle: Implications for Ranchers," Research Working Paper RWP 23-06, Federal Reserve Bank of Kansas City.
  • Handle: RePEc:fip:fedkrw:96488
    DOI: 10.18651/RWP2023-06
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    1. Yusuke Kuwayama & Alexandra Thompson & Richard Bernknopf & Benjamin Zaitchik & Peter Vail, 2019. "Estimating the Impact of Drought on Agriculture Using the U.S. Drought Monitor," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 101(1), pages 193-210.
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    More about this item

    Keywords

    drought; agriculture; cattle prices;
    All these keywords.

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment

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