By Kevin Killough, energy reporter
At the start of the growing season, many farmers and ranchers in Wyoming were looking at rising commodity prices and expecting to maybe have a good year. Then, as the cost of fertilizer, fuel, cattle feed and freight weighed on their businesses, the margins those high commodity prices would have produced began to slim.
“It’s tougher than it’s ever been,” said Sage Askin, owner of Askin Land and Livestock in Lusk.
Shipping in all industries faces labor shortages and high fuel costs, and it’s hitting livestock producers hard this year.
“The freight itself was never anything we used to think about. You just hire a truck. Now we’re having to hunt around and just kind of take what you can get,” Askin said.
Askin said for some producers, it’s impacting their ability to be good stewards of the land. When you have to leave cows on a pasture too long, it’s not good for it.
“Everybody does the best they can, but these are things we’re faced with,” Askin said.
When they can get the trucks to move their cows, fuel and labor costs are soaring, which eats away at their profits.
Askin said they tried to budget accurately for Askin Land and Livestock’s direct fuel costs, contracting between $3.00 and $3.20 per gallon. Instead, they were looking at $5 per gallon.
“From a budget perspective, we wildly missed it,” Askin said.
Those costs, Askin explained, are a big portion of the cost of operations. Being off 70% on their estimations, they’ve had to become more efficient with their fuel usage.
“I know a lot of people have had to increase their lines of credit in order to make up for” the increased cost of fuel and freight, Askin said.
Drought conditions are hitting alfalfa yields and driving up feed prices. Askin said he’s seen feed prices go from $100 per ton a couple years ago to $300 per ton now.
Jim Magagna, executive vice president for the Wyoming Stockgrowers Association, said that due to the scarcity and cost of feed, many cattle producers are shipping their cattle off to feed lots earlier than usual, which means the quality of the cow isn’t as good as it could have been.
Brett Crosby, owner of Cowley-based Custom Ag Solutions, said, “It was so incredibly dry this spring. There was just no water anywhere.”
He’s said he’s had neighbors selling off 10% to 20% of their herd earlier in the year, but there wasn’t a good market for them. So, they had to sell off a chunk of their herd to stay viable, but they didn’t get a lot of money from the sales.
“So that was kind of a double whammy for people who had to sell cows,” Crosby said.
One of the best indicators of the general state of the cowherd in the U.S. is the number of heifers in the fed cattle slaughter mix. Crosby said the industry killed more females between January 1 and July 1, than the same period of any year since 1982.
Magagna said ranchers in the southeast part of the state, around Wheatland and Cheyenne, got some precipitation later in the year, which will help their cows put on some weight before they’re shipped, but some parts of Wyoming just stayed dry through the season.
The growers are also facing the same challenges. Beau Fulton grows alfalfa seed, grass seed, malt barley and pinto beans up on Heart Mountain in Park County.
“Fertilizer and fuel were up so darn much, which I’m sure it’s something you’ll hear from everyone,” Fulton said.
Magagna said, besides everything else, farm equipment costs are also up. When producers need parts for their machinery, it’s hard to come by, and when they manage to get their hands on what they need, costs are way up.
The one saving grace for the year is that the commodity prices are up. Those will help make up for some of those increased costs when it all goes to market, but margins are going to be tight.
Askin said consumer prices are often misperceived as being a boon for the rancher.
“A lot of people think that beef prices at the grocery store correlate all the way back to the producer. Unfortunately, our share of that is very low,” Askin said.
Crosby said that due to the weakening dollar this year, the big packers that control much of the meat processing will likely see solid revenues from selling off byproducts on the export market. This will mean the packers’ margins will be better, and so the producer should get a good price per head of cattle. Cattle futures are also doing really well, Crosy said.
For the meat consumer, Crosby said, prices will be up as all food prices are, but he doesn’t think they’ll explode in the coming year since exports revenues will be good.
Of course, nothing is for certain.
Fuller said that farming comes with these challenges every year, and for his own operation, he said it’s not going to be a terrible year.
“Everything has been fairly good. I’m pretty thankful,” Fuller said.