Brookings, SD – The Drought Monitor continues to classify parts of South Dakota as a level one to three drought. For many growers, drought conditions have persisted since 2020. These conditions have led them to make untraditional management decisions in an effort to maintain the viability of their operation.
Decisions have included selling livestock, changing grazing practices and tenancy agreements, and changing feed rations. Each of these decisions must be taken into account, whether the drought persists or improves in their area.
During periods of low rainfall, many decisions regarding normal livestock inventory must be made.
“SDSU Extension has a variety of budgeting calculators to help with the decision-making process,” said Heather Gessner, SDSU Extension Livestock Business Management Field Specialist. “In addition to the calculators, we have staff available to help with the options available to breeders.”
Sales of non-traditional livestock may result in producer income tax changes. Selling cows, selling heifers instead of keeping them, selling weaned calves instead of racing them during the winter, and other sales increase the amount of income earned throughout the year.
Without the expense of feeding or managing these animals, the total income tax bill may be higher than normal, which will represent an increased expense that the operation will have to pay.
“I encourage producers to work with their accountants when making production decisions,” Gessner said. “The change in sales or additional expenses will be reflected on Schedule F at the end of the year.”
Herd reduction is traditionally practiced to protect pastures from overgrazing. With fewer animals in inventory, the fixed costs per cow increase, thus increasing the equilibrium price for calves raised, if the pasture remains ungrazed during the summer.
“As some areas get rain, growers in those areas may consider leasing those acres or haying them,” Gessner said. “This way, the operation can generate income for family or farm/ranch expenses.”
The process of renting acres requires many considerations. Beyond the rate per acre, or AUM received, the landowner should also consider what conservation practices they wish to follow on their acres, continued agreement, livestock removal dates, and information cancellation of the agreement. Written leases are strongly encouraged to avoid misunderstandings between the parties involved.
The land lease agreement can also come with a consideration for the sharing of livestock – this option can work for both parties, as the calves are used as bargaining chips. When considering this option, both parties should work out a written sharing agreement to ensure they know and understand all of the components included.
Herd reduction can also provide cash to buy feed for the rest of the cow herd. Given current feed and transportation costs, producers should carefully consider the option of having feed delivered to the ranch or transporting the cows to the feed source.
Producers in eligible drought areas may qualify for federal assistance through the Farm Service Agency (FSA) to move livestock or transport feed. Producers making these decisions should contact their local FSA office for further information and qualification requirements.
Other feed considerations include reducing the cost of the balanced ration, as ensuring the ration is balanced for protein and energy is the first step in feeding livestock economically.
The second step to making the cheapest ration is to evaluate different energy and protein sources. The foods used in the rations all vary in cost, location, nutrients and price. Depending on the nutrient required, it may be more economical to purchase a feed and have it delivered long distances rather than paying a low price for a closer feed.
Livestock and crop producers can find more information on drought management by visiting the SDSU Drought Extension web page.
For more information, contact Heather Gessner, SDSU Extension Livestock Business Management Field Specialist, at Heather.Gesser@sdstate.edu or 605-782-3290.
–SDSU extension
