Rancher Dan Gralian conducted the
annual sale of calves at his Elko Land and
Livestock operation near Battle Mountain a
few weeks ago.
Calves sold for 88 cents a pound. The
problem: Gralian had invested 95 cents a
pound in raising them. A year ago, Gralian
says, calves that cost 52 cents a pound to
raise sold for $1.04 a pound.
"We're in the middle of one of the biggest
squeezes we've faced since the 1980s," says
Gralian, who also serves as president of the
Nevada Cattlemen's Association.
Fuel costs a big piece of the puzzle for
most farming and ranching operations
continue to be relatively high at the same
time that prices for hay and cattle are beginning
to soften.
The laws of economics aside, the biggest
question for 2009 as always can be
answered only by Mother Nature.
"The real key is always going to be water
and whether we have the resources available
for production," says Doug Busselman, executive
vice president of the Nevada Farm
Bureau.
Cattle producers, who account for about
60 percent of the income generated by
Nevada's agricultural sector, face a particularly
difficult year, says Ron Torell, an Elkobased
livestock specialist with the University
of Nevada Cooperative Extension Service.
"The rough economy, energy from
ethanol, high feed costs, weak dollar these
factors are all contributing to the beef industry's
bleak 2009 outlook," Torell says.
Cattle prices soften when the national
economy goes in the tank. Financially
pinched consumers go out to eat less often or
turn to less-expensive meats for the dining
room table.
At the same time, the weak dollar makes
U.S. exports
including beef
more expensive in
foreign markets.
The demand from
ethanol producers,
meanwhile, continues
to put
upward pressure
on the prices of
corn and other
crops that are fed
to feedlot cattle.
That, in turn,
reduces demand
for calves and
yearlings produced
by Nevada's ranches
to supply feedlots.
But the biggest economic worry of ranchers
and farmers in 2009 continues to be the
price of oil, which affects the cost of everything
from diesel fuel to fertilizers.
Despite a sharp decline from last summer's
prices in August, a gallon of diesel
ran about $4.30 prices have trended
steadily upward for the past couple of years,
says Kynda Curtis, a marketing specialist
with the University of Nevada Cooperative
Extension Service.
The recent price of about $2.30 a gallon at
northern Nevada
diesel pumps
compares with
$1.31 in 2002.
A study by
Curtis and Carol
Bishop, an agricultural
researcher at the
University of
Nevada, Reno,
finds that farmers
take a big hit
when diesel
prices rise.
A farmer with
750 acres of alfalfa
in Pershing
County, for
instance, would
see his annual profits drop from $36,555 to
$11,553 at this summer's sky-high prices.
While the effects of higher fuel prices are
felt by all farmers and ranchers, they tend to
hit hardest at smaller operators and farmers
who rely heavily on mechanized machinery.
Says the Farm Bureau's Busselman: "The
fuel inputs are significant for agricultural
production."
Higher oil prices show up, too, in higher
costs for nitrogen-based fertilizers and in the
expense of pumping irrigation water.
But some see the sprouting of new growth
for the state's agricultural producers even
during the cold and dark days of 2009.
For starters, Gralian says recent declines
in prices for diesel fuel provide some help to
hard-pressed ranchers.
Torell, meanwhile, notes that ranchers
and feedlot operators across the country are
cutting the size of their herds in response to
higher costs and lower profitability.
"This reduced supply of cattle, if met with
increased demand for our product, is our way
back to black ink," he says.
And Busselman notes that ranchers and
farmers in Nevada appear to have escaped
the worst of the credit crunch.
"For the most part, Nevada agriculture is
not as dependent on credit as some other
segments of agriculture around the country,"
the Farm Bureau executive says.
