Billings rancher Douglas Sidwell recently got a call asking if he could spare any hay. The buyer was a hay broker in Texas, which is stricken by an unrelenting drought. The broker was looking for as much hay as he could get his hands on to feed starving cattle. Sidwell had plenty, so he's working out a deal to ship about 1,000 tons of hay to the San Antonio and Texas Panhandle areas. "To put that into perspective, it's, give or take a ding-dong, about 2,000 round bales," he says.
As the worst single-year drought in Texas history ravages the state and its multibillion-dollar cattle industry—the nation's largest—Montana's feeling the repercussions. Desperate ranchers in Texas and surrounding scorched states find themselves snatching up Montana's abundant hay—and hiking up the prices for everyone in the process.
According to James Ward, of the U.S. Department of Agriculture, a ton of hay in Montana is selling for upwards of $175, on the verge of doubling last year's average price.
Many Montana ranchers are taking advantage of the new market, says Rob Fraser, a field representative with the Miles City Livestock Commission. He says haulers who come to Montana from Texas and Oklahoma with oil field equipment have recently been making the return trip loaded with square hay bales. Buyers are paying a premium for square bales because they fit easily on the back of semis. In fact, Fraser says, a rancher in Broadus is selling hay to a Texan who's paying to have his round bales unrolled and then square-baled.
"I don't know how long it will continue," Fraser says, "because we have a hard time understanding how producers in Texas can bring that hay all the way down there—I hear it's bringing well over $200 a ton and in some cases up near $300—and make that work. They're just trying to salvage their core herd and hold them together."
Adds Sidwell: "There's an old adage that goes, 'It's cheaper to haul the cows to the feed than the feed to the cows.' A lot of guys are doing it bass-ackwards this year, and it's costing them."
Actually, they're hauling feed to the cows and cows to the feed. Sidwell's father, Richard, a real estate agent, has sold farm and ranch land for the last 35 years, and he says he's seen an uptick in the number of ranchers from the south leasing ranchland in eastern Montana. "It's noticeable, it really is," says Richard, who's gotten calls in recent days from Texas, Oklahoma and southern Kansas. "The ones that can do it are looking to buy real estate up here and spread their operation out so it gives them an opportunity to try to keep their cow herds together."
With southern-state ranchers hauling their cattle to greener pastures in the north, the number of cattle in Montana is rising beyond its usual count, which is between 1.6 and 1.8 million mother cows, the seventh most in the country, according to John Paterson, a beef cattle specialist with the extension service at Montana State University. The influx, Paterson says, presents a potential problem: "If you are bringing these cattle into Montana, are all the health records up to date?" He says the biggest concern is bovine trichomoniasis, which can cause infertility and abortions. Officials in Nebraska, who are seeing similar import trends, have begun quarantining herds if ranchers haven't followed import rules.
If Texas ranchers don't send cattle north, they'll probably slaughter them—maybe as many as 500,000, according to Texas A&M University. "We're going to be talking about a historically large reduction in beef-cow numbers," David Anderson, an economist at the university's extension service, recently told Bloomberg. "If nothing else changes, that's tighter supplies and less beef and higher prices." And the size of the U.S. cattle herd was already at a 50-year low.
High beef prices could be good for Montana ranchers—if they keep enough hay to feed their cattle through the winter. If not, it'll be awfully expensive to buy more.
"Everybody's been caught up in the frenzy of shipping their hay to Texas," says Douglas Sidwell. "There've been a few guys who I think are going to get in trouble because they've shipped too much hay, and it's going to be interesting to see what happens there. If we get any winter at all we're going to be in pretty poor shape."
Meanwhile, the drought in Texas shows no signs of abating. Texas State Climatologist John Nielsen-Gammon predicted last week that it could last until 2020.