What Does Drought Really Cost You? - Webinar Recap

Redd Summit Advisors Ag Risk Consultant, Ross Bronson, recently hosted a live webinar with NCBA to break down the costs associated with drought for livestock producers. Over the course of the session, Ross dissected the topic into five pillars: drought mitigation and sustainability, case studies on drought cost, mitigation practices to help with preparedness and management, LRP and NAP programs, and utilizing PRF insurance as a mitigation program. 

Watch a recording of the webinar here: https://www.youtube.com/watch?v=e6lp-B0dZ0A 

Before delving into the nuances of drought costs, it's crucial to differentiate management from mitigation. Management is categorized by dealing with a situation as it comes, like the saying “We’ll cross that bridge when we get to it.” Whereas mitigation, on the other hand, is being prepared before something happens to be able to manage its effects effectively. This is more of an “I have a map that shows me where the bridge is, and I have a plan if it's closed or flooded” approach.  

When evaluating the cost of drought for your operation Ross highlighted the following expenses: Supplemental feed, reduction in carrying capacity, and unforeseen costs including the cost of restocking at a later date, selling cattle on a depreciation schedule, lost genetic improvement, and reproductive concerns. Through a theorized case study, Ross concluded that on the conservative end, drought tends to cost producers upwards of $40,000 during a 3-year span. 

But what can we do to mitigate those costs and keep your operation sustainable in the sense that it will continue to be profitable in the future? Ross lays out a few options. He emphasized the importance of accurate and conservative stocking rate calculations to identify how much of your land is actually usable for your animals (cattle can’t graze on cliff faces), as well as the availability of tools that let you measure actual forage trends on your rangeland such as Rangeland Analysis. Tiered culling programs and an overall understanding of risk management will also be instrumental in mitigating your costs during a prolonged drought. 

Ross concluded this webinar by highlighting risk management tools currently available to producers such as LRP, PRF insurance, and NAP. He encourages all producers to at least talk to an expert to assess the numbers and identify how these programs could benefit their operation. 

To watch a recording of the whole webinar click the link above, and be sure to subscribe to the Redd Summit blog to stay up to date when new webinars are added to the calendar!