Drought and Cattle : Implications for Ranchers

Drought has become more intense and frequent in many areas of the United States in recent years. Despite growing concerns about drought’s effects on the agricultural sector, few studies have quantified its effects on the cattle industry. In this paper, we estimate the effects of drought on cattle herd management, hay production, hay prices, and farm income in the United States from 2000 to 2022. We find that drought reduces hay production and leads to higher hay prices. We also find that drought contributes to herd liquidation: as drought intensity increases, average herd size declines. These declines in average herd size lead revenues to temporarily increase, perhaps due to farmers selling larger quantities of market and breeding stock. Finally, we find that drought is correlated with lower farm incomes. Overall, our results suggest drought has a temporary positive effect on rancher revenues, but a negative effect on earnings