The twelve counties comprising the Northwest and West Central agricultural reporting districts (Butte, Corson, Dewey, Harding, Perkins, Ziebach, Haakon, Jackson, Lawrence, Meade, Pennington, and Stanley) were among the South Dakota counties hardest hit by the blizzard on October 4-5, 2013. According to USDA’s National Agricultural Statistics Service, these twelve counties had 769,000 head of cattle and calves as of January 1, 2013. Of these, an estimated 456,000 head were beef cows on ranches. While final losses are still being tallied, South Dakota’s state veterinary office estimates up to 25,000 head may have perished in the storm. This implies upwards to 5% of the region’s cow herd could have been lost in the blizzard.
To those not familiar with the beef cow industry, a 5% loss of beef cows in just one part of one state might seem small, but the economic impact on the region and state are significant and will be felt for some time. The impact on individual ranchers suffering the losses is especially large. Some individual ranchers have had confirmed losses of over 20% of their herd. Though not verified through official reporting venues, many reports indicate much higher losses, up to 50% of herds in some cases. Based on 2007 Census of Agriculture data, the average beef cow herd size is about 155 head in Northwest and West Central South Dakota. Even a 10% loss for such an average sized operation would be about 16 head. Given the high cull rates in recent years caused by drought and high feed costs, it is expected that many of the beef cows that died in the storm would have been young cows near the peak of their productivity. Current market prices for good, young bred cows generally range from $1500-2000/head. Prices for pairs (cows with calves at their side) range from $2000/pair to $2500/pair. So, for an average loss of 16 head of cows conservatively valued at $1500/head, the total value of the death loss is about $24,000. The rancher with a 20% death loss having an average herd size of 155 head could have lost over $46,500 in the storm. Of course, some ranches are much larger than these averages and lost 75-100 head of beef cows (or more), which would be valued from $112,000 to $150,000. Financial losses of a quarter million dollars or more to an individual rancher are quite possible in many situations.
The value of the lost beef cows only is part of the financial impact that ranchers will experience from this storm. In the short run, costs for recovery efforts will include extra feed, fence repairs, and disposal of dead animals. Reports are also coming in that there is death loss among cows that survived the storm, and calves have reduced immune function, making them more susceptible to respiratory and other diseases.
In the longer run, rebuilding herds will be more expensive, and in some cases, difficult to achieve at the same level of quality as before the blizzard. Ranches affected by the storm included both commercial cow-calf operations and seedstock producers. For all, fewer replacement bred stock will be available in the region, but also nationwide. With total beef cow numbers in the United States at the lowest level they have been in since the 1950’s, high quality breeding stock is in short supply across the country. For some operations, seedstock in particular, breeding stock with the desired genetics may not be available or will be significantly more expensive than the average prices quoted above. Prices for such high quality breeding stock commonly range from $3,000-10,000 per head, but the value of losing decades worth of genetic selection in a herd is incalculable.
Looking at the entire financial picture, ranchers are likely to become more leveraged as their asset base decreased (lost cows) and their sales volume declined (lost calves that were days or weeks away from being sold) due to the death losses. So, their interest costs for maintaining their remaining operation, and possibly re-growing their operation, will be higher as well. Many of these costs cannot be calculated until more is known about the actual size and scope of the losses incurred by these ranchers. Yet, it is likely that some producers hardest-hit by this storm could become insolvent as they try to recover.
The economic impact of the blizzard will also be felt across the state and regional cattle industry and on main street businesses throughout western South Dakota. Already tight feeder cattle supplies have been further reduced by the storm. This may result in slightly higher prices cattle feeders pay for feeder calves and fewer cattle to place in feedyards this fall and winter. Already high prices for high quality breeding stock will be driven higher. Additionally, the loss of an estimated 25,000 head of beef cows will not only have a nearly $40 million direct impact on ranchers who owned the cows, but the magnified indirect and induced economic impacts will be felt in the regional economy as ranchers spend less money on goods and services, which ultimately will affect nearly all main street businesses in the area.