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Get ahead of drought concerns with detailed management strategy

Get ahead of drought concerns with detailed management strategy

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Texas weather is jokingly described as continual drought with intermittent floods. Actually, the statement fairly well describes our long-term weather patterns.

In the 1860s, the western half of the state had seven years of drought. During the 1930s, all of Texas except the Gulf Coast and Rio Grande Valley experienced eight years of drought. The 1950s drought involved most of the state for five years. And there have been several droughts since then. The U.S. 2020-2021 winter outlook shows a tendency for drought to develop in the Land & Livestock Post reader area, with a 50% to 60% chance of warmer than normal temperatures and less than normal precipitation. In reviewing this weather data, it becomes evident that a drought management plan is needed. The University of Nebraska’s National Drought Mitigation Center offers seven steps for drought planning in a guide titled “Managing Drought Risk on the Ranch.”

Step 1: Organize the planning team

The first step listed in the planning guide is to form a planning team that might include family members, business partners, a banker, range management adviser, business consultant and marketing expert. Drought plans usually exhibit more completeness and applicability when developed with input from different perspectives.

Step 2: Write ranch vision and strategic objectives

These are recommended if they don’t already exist. An outline on how to develop a ranch vision is presented in “Strategic and Scenario Planning in Ranching: Managing Risk in Dynamic Times,” published by South Dakota State University.

A drought plan is part of the overall ranch plan, so the vision and objectives are written for both drought and periods of adequate rainfall. A good vision statement provides clear direction as to where the business is headed and is written to provide incentive and motivation for moving forward.

A vision statement should include three key components:

1. A statement about the business’ values and reason for its existence.

2. An envisioned future describing how the business will look if it achieves its goals.

3. A recognition of how the business serves its stakeholders.

Vision statements are normally written for a 5- to 10-year period. They should encourage cooperation and creativity of the ranch team. An example of a vision statement that applies to ranches is the following, written by Paint Rock Canyon Enterprises in Hyattsville, Wyoming:

“We progressively realize goals in a fun, challenging, encouraging environment and continually improve people, products, services, the ranch, our community and the ecosystem while sustaining a net profit.”

Here’s an example of objectives or goals that fit the above vision statement, adapted from one written by Horse Prairie Ranch near Dillon, Montana:

1. Obtain premiums on cattle sales.

2. Exercise innovation in developing and preserving rangelands, hayfields and improvements.

3. Implement best practices in operations.

4. Supplement income with an integrated hunting operation.

5. Serve as responsible stewards of the environment.

Step 3: Take inventory

An inventory of resources helps define what you have to help accomplish the objectives. This is described in the National Drought Mitigation Center’s planning guide. Resources include precipitation, range and forage, herd, water, finances and human resources as listed in Table 1 above. In the precipitation category, past frequency of drought and weather extremes are used to predict and plan for future droughts. Knowing when to expect precipitation helps determine critical dates when management decisions are needed, such as reducing herd size. Critical dates are also timely monitoring points in annual management cycles.

The range and forage resource involves plant composition and growth periods, pasture health and condition, pasture forage production potential and availability of other economical feed supplies. Current and predicted forage resources are compared to current and predicted forage demand on critical dates or at target points. Steps to balance available forage with demand are suggested in the action plan. Critical dates are often based on midpoints of rapid growth of dominant grass species. Critical dates are earlier for cool-season forage resources compared to warm-season species.

Number of animals in each class (heifers, mature cows, bulls) are listed in the inventory under herd resource. Also noted under this resource is the number of animal units that graze the pastures throughout the year as well as the current stocking rate. These numbers are then used to evaluate the current grazing system and identify needed changes. The data is also used to determine quantity and type of supplement needed to meet animal nutrient needs.

Water is an important resource in the inventory, because it is essential for cattle and ranch tenant survival. It is important to know the quantity and quality of water on the ranch and whether it is enough to support the grazing system and withstand drought. The inventory may show the need for additional water systems.

Financial health as part of the inventory is measured by liquidity, solvency and unit cost. One of the measures of liquidity is net cash flow, calculated by subtracting annual cash outflow from inflow. A large positive difference indicates that there is not a problem. Small positive differences are a signal to exercise caution. If there is a large negative difference, you have a problem that needs immediate action.

Solvency is measured by the debt-asset ratio and net worth. The debt-asset ratio is calculated by dividing the amount of debt by value of assets. Anything that has value and available for paying debts is considered an asset. If the debt-asset ratio is less than 40% there is not a problem. A debt-asset ratio of 40% to 60% signals caution. There is a serious problem if it is over 60%.

Net worth is total asset value minus total liabilities. Large net worth is healthy, moderate indicates use of caution and small is a serious problem. A large positive change from one year to the next is good, a small change requires caution and a large negative change creates a serious financial problem.

Finance resources can also include unit cost of feed, measured in dollars per hundred-weight and compared to benchmark herds. There is not a problem when feed costs are lower than those for benchmark herds. If costs are above the average for benchmark herds, caution in agreeing to feed prices is recommended. There is a problem if your feed costs are considerably higher than those for benchmark herds.

In evaluating human resources, explore family members’ interests and abilities and determine where they fit into the ranch operation. Availability of hired labor is also part of the inventory.

Step 4: Identify critical dates and target conditions

According to the National Drought Mitigation Center planning guide, another important part of drought planning is identification of critical dates when management decisions are made. Critical dates are timely monitoring points in annual management cycles. On critical dates, current and predicted forage resources (target points) are compared to current and predicted forage demand. Target points are normally based on carrying capacity of current forage or a prediction of forage growth based upon percentage of average precipitation received. Balancing steps are taken, which are written in the ranch action plan.

Critical dates are often based upon midpoints of rapid-growth windows for dominant grass species. Work with Natural Resources Conservation Service, extension specialists or private consultants to identify the earliest possible indicators of pending forage deficits. Some possible indicators are soil moisture, last year’s precipitation and plant growth, precipitation in recent months and current standing and residual forage.

Step 5: Monitor resources

Targets are listed in the ranch plan that support the objectives and vision statement. It is important to monitor key resources on critical dates to obtain information to use in making any needed changes required for staying on target. A monitoring plan and schedule is shown in Table 2, above.

Step 6: Develop strategies for drought preparation, response and recovery

The planning guide states that a drought plan will include strategies for implementation before, during and after drought. Thinking through the feasibility, impact and cost-benefit ratio of each potential management option will help identify strategies that will work best for the operation. The list for this year may look completely different from the list for next year. Length of drought, severity of drought, market conditions and other factors have a great impact on what managers can do during drought.

Step 7: Implement and evaluate the plan

Once implementation of the plan has begun, don’t forget to periodically ask these questions: Is your drought plan working for you? Is it moving you toward your goals? Are you satisfied with how you managed through a drought using the plan? Would you make any changes to it? If finances, range and livestock resources are monitored on the predetermined schedule, the above questions are easily answered and trends will appear.

The goal of most drought management plans is to avoid or reduce profit losses. Table 3 above shows an example of how a ranch in the sandhills of Nebraska reduced its losses during the 2002 drought. It is better to manage for droughts than just hope they won’t occur.

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