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BC Democrat Online - Las Animas, CO
  • Drought continues to shrink herds

  • Whether to sell more cows is an ongoing dilemma that only gets harder after the low end of a herd has been culled.
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  • ANTON, Colo. — Whether to sell more cows is an ongoing dilemma that only gets harder after the low end of a herd has been culled.
    "It's a tough decision to make," said John Deering, a Colorado State University ag business management specialist recently at a cow-calf producer meeting.
    With future tax provisions up in the air, it's a good idea for cattlemen to consult with a tax specialist before planning a liquidation strategy.
    Areas receiving a U.S. Department of Agriculture drought disaster declaration (which includes most of the Central U.S.) can sell cows and buy them back within four years without incurring a tax penalty. Or at least that's true through Dec. 31.
    "If you are worried about grass production for next year, consider cutting back on those cows to take advantage of these provisions by the end of the year," Deering said. "I don't know whether they will be available after that."
    In addition to the micro-economic considerations so important to individual producers, economists are also watching the macro-economic impacts of drought on the U.S. cowherd overall.
    Even with cull cow prices at record levels, data indicates most of the cows being sold are going to new homes instead of being slaughtered, at least for now, Deering said.
    U.S. cow slaughter is expected be down about 4.5 percent in 2012 compared to last year. Beef cow slaughter is expected to be down almost 13 percent, while dairy cow slaughter is expected to be up about 6 percent.
    Declines in beef cow slaughter is significant, because the nation's beef herd is already at its lowest level since the 1950s.
    "We may be on the upswing a little bit, but that depends on whether the drought continues," Deering said.
    Another economist following the drought's big-picture implications is James Robb, director of the Livestock Marketing Information Center in Denver. He will present an in-depth economic update and market outlook during the tri-state cow-calf symposium to be held Jan. 8 at the fairgrounds in McCook, Neb.
    The symposium is a collaboration of extension experts in Colorado, Kansas and Nebraska. It is held every other year in a rotation between the three states. This year's theme is successfully managing a cowherd during drought.
    Contact the Red Willow County Extension Office at 1-877-674-6947 for more details or to register. The meeting is free and starts with registration at 8:30 a.m.

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