Drought

The economics of ranching and farming is the field of interest of University of Nevada, Reno economist Tom Harris.

I spoke with you about 10 months ago on the impact of drought on the economy. Things have not really improved. Can you tell me about the impact on Nevada ranchers?

Ranchers and agricultural production, alfalfa and all that, is bound by surface water irrigation—TCID [Tahoe Carson Irrigation District], Walker River, Pershing, Rye Patch. They get a lot of surface water irrigation, so for many of those people, the irrigation is really reduced. They may only have 20, 25 percent of normal water delivery. That would be a significant decrease in ag production. Usually, you get three cuttings. You wouldn’t get that. For them, it would be a loss of revenue. The price of alfalfa would rise. In Eureka, in Diamond Valley, they have ground water. There is some worry about power costs and the depth of water, but some of the people who have ground water sources for alfalfa, their production should be maintained. As for livestock producers, many of our northeast Nevadans, many of our range cattle producers also grow alfalfa, and so they would be hurt with that, too, because they usually feed within their own operations. They kind of grow two crops at the same time. They grow cattle, but they also grow alfalfa to feed their cattle. If it’s a good year, they can also sell some of the alfalfa. Of course, this year, they’re going to be feeding alfalfa but the problem is, some won’t be able to feed their own [cattle] with their own [alfalfa] supplies. At the same time, alfalfa supplies go up. … Dairy herds also will be increased in food costs. We’re not the only place having the drought. New Mexico and the Midwest are having a drought, too. … Nevada qualifies for drought aid, so some of our producers may be able to get some loans, but of course, you have to pay them back. … It’s always a fear of what may happen next year. …

With the price of alfalfa going up, I assume the price of beef and other farm products go up.

Not necessarily. What happens is basically this: Alfalfa’ll go up, which is an increase in food costs. Sometimes, yes, but what will happen though, is because [for] producers, it costs more, they will liquidate their herds. So when you liquidate your herds, you increase the supply, and all of a sudden the price of beef will go down. This kind of happened last year. … It takes time to rebuild [after liquidating]. I do know in Humboldt County, Humboldt last year had those extreme rangeland fires. And in that area … the livestock people will not have access to public lands [for grazing] because it has to rehabilitate that. So that’s at least a two-year [period] being slowly—go back and build up your herds when you can’t be on public land. … And then, honestly, I think also another question is during this drought, there’s many of our rangeland producers who are close to retirement. And do they want to go back after this to build back their herds? So there’s going to be some long term impacts from this drought.

Are there cases around here where ranchers, instead of reducing their operations, simply decide to get out of the business?

Yes. I mean, it’s just an investment deal. It’s an investment question. … Some of them, if there’s not a cohort that wants to take it over, they can. And sometimes there’s consolidation of ranches and farms. But, you know, this is the question that’ll happen. At the same time, we go it going on, this dry milk power plant going on in Fallon that’s coming in, and there’s potential of dairy herds increasing. … You may have some producers who retire, and then you have some producers who will let their children take over the operation. And then there’s also federal help that will come around that will help maintain them to some degree.