Writer: Edith A. Chenault, (979) 845-2886, e-chenault1@tamu.edu
Contacts: Dr. Roland Smith, (979) 845-1751, rdsmith@tamu.edu;
Joe Outlaw, (979) 845-3062, joutlaw@tamu.edu
COLLEGE STATION – The statewide economic impact of the drought for Texas agriculture could be more than $1.7 billion in losses, according to figures released today by the Texas Agricultural Exte nsion Service.
The projected direct loss of income to agricultural producers is $517 million, which will lead to a loss of another $1.2 billion in economic activity for the state, said Dr. Roland Smith of College Station, professor and associate head for the department of agricultural economics at Texas A&M.
According to the National Weather Service, all 10 climatic regions within the state received below-average rainfall from March through May, a critical time in the production of corn, cotton, sorghum, wheat and forage in Texas.
For example, the lower Rio Grande Valley received no measurable precipitation during May and stood at only 17 percent of normal rainfall for the 90-day period that ended May 31.
East, Central and South Texas averaged from one-fourth to one-third of the normal rainfall for the same period.
“Many farmers, ranchers and agriculturally related businesses and communities in Texas are again faced with the prospect of severe economic losses due to drought,” said Dr. Joe Outlaw of College Station, Extension economist.
“This is a grim reminder of the devastation that occurred in many areas of Texas during 1996.
“Without significant, widespread moisture in the month of June,” Outlaw said, “drought losses will spread rapidly to impact farmers, ranchers, and related businesses statewide. The anticipated repercussions on the Texas agricultural economy, should this occur, could be greater than that of 1996.”
Presently, the drought is more pronounced in Central and South Texas, where total losses for cotton, the state’s leading crop, have already reached an estimated $157 million to producers, or about 475,000 bales, said Dr. Carl Anderson of College Station, the Extension economist who specializes in cotton marketing. The producer’s loss of income impacts total business activity for the state by about $529 million. This lost income hits local rural businesses the hardest, Anderson said.
As of June 15, the 3.5 million acres of cotton across the southern High Plains was still too young to evaluate.
Irrigation water is limited and is available to about half of the region’s acreage, he said. Early growing conditions are very dry, with about a foot of dry top soil.
“Without timely and measurable rainfall, the chances of making a reasonable crop on about one-third of that acreage are fading every day,” Anderson said.
The 3.5 million questionable, West Texas acres add up to 25 percent of the total acreage in the nation.
“A major shortfall in Texas cotton would reduce U.S. production and strengthen market prices,” he said.
In 1997, Texas cotton producers harvested 5.3 million bales of cotton, worth $1.8 billion at the farm and generating $6 billion economic activity in the state.
Smith said the genesis of this year’s drought is much different than that of 1996. The fall and winter of 1995-96 were extremely dry leading into the critical March-May production period. This year, however, the state received well above average rainfall from December 1997 through February 1998.
However, when the rainfall shut off, it shut off. Several counties in West and South Texas already have started the request process to be declared an agricultural disaster area in order to be eligible for federal assistance. Requests for agricultural disaster declaration must be initiated at the county level and forwarded through the Governor’s office to USDA in Washington, D.C., for final approval, Smith said.
On a more positive note, since the first of June, important rains have been received over the Edwards Aquifer recharge zone.
Joe Pena of Uvalde, Extension economist, reported that as of Monday the aquifer water level had risen 4 feet from last month. This may postpone for a short time further water use restrictions in San Antonio.
Grain Crops
Corn and sorghum are the two most affected grain crops in Texas; however, due to the unusually wet fall and winter, the average yields for the 1998 Texas wheat crop likely will be above normal.
“Although the yield potential was cut short by the dry April and May, the wheat plant was able to draw on the subsoil moisture available to still reach the above average yield level for the state as a whole.” said Mark Waller of College Station, Extension economist.
“According to the June wheat crop estimate just released by the Texas Agricultural Statistics Service,” he said, “only extreme Northeast, West Central, and Southwest Texas are estimated to attain wheat yields below that of 1997.” Therefore, no statewide losses are estimated for wheat.
In marked contrast, dryland corn and sorghum conditions continue to worsen in Central and South Texas. Losses to the farmer are estimated at $94 million for grain sorghum and $58 million for corn. The statewide impact on the Texas economy of this production shortfall would be slightly above $500 million.
At the end of May last year, 80 percent of the state’s sorghum crop was rated “good” or better. This year, only 36 percent is considered in that category, with 25 percent rated as “poor” or “very poor”. Again, the conditions are variable depending upon planting dates and where isolated showers were received, Waller said.
Livestock, Forage, and Wildlife
Texas rangelands in many areas of the state have been negatively impacted by the dry, unusually hot, and windy conditions in April and May. As of May 31, nearly half the state’s rangeland was rated “poor” or “very poor,” with only 12 percent being “good” or better, according to Dr. Ernie Davis of College Station, Extension economist. (This estimate is developed by the Texas Agricultural Statistics Service with input from county Extension agents).
Recent isolated showers have relieved some of the drought stress and provided critical stock water in some areas. But, at the end of May last year, only 7 percent of the rangeland was rated “poor” or “very poor” and 65 percent was rated “good” or better a marked contrast to the current situation, Davis said.
West, South, and East Texas are most affected. In those areas, ranchers already are providing supplemental feeding primarily from carryover hay supplies from last year.
Surface water is also becoming an item of concern in West and South Texas as many ponds and stock tanks are less than one-half full going into the traditionally driest part of the year. Continued hot and dry weather will result in ranchers having to begin liquidating a portion of their herds. They also will face higher production costs in additional supplemental feed and have to haul water to cattle. In some areas, this will result in sizeable losses for cattle ranchers, but it is too early to put economic projections on these added production costs across the state, Davis said.
A major difference between this year and 1996 is the fact that many ranchers had not re-built their herds to the level that existed in 1996. Thus, only recently have overly lightweight calves shown up at the local auctions in the drought-stressed area. So far, the cattle price impact of these forced sales has been relatively small. Ranchers forced to sell cattle early should keep accurate and timely records of the transactions in case they can defer income into future years for tax purposes.
Another negative fallout of the poor range conditions and lack of stock water is on native wildlife. Although it is too early to determine the overall impact, the wildlife harvests this fall and winter could be affected in those areas where ranchers depend on hunting leases for additional income to support the ranching operation.
The drought is cutting hay production across the state, said Dr. Greg Clary of Overton, Extension economist. The first cutting of hay this summer was short due to the dry weather, and most forage producers will miss the traditional second cutting due to inadequate forage growth.
The production value of lost hay production will approach an estimated $175 million statewide, leading to an economic impact totaling $582 million.
So far, this has not affected greatly the dairy producers in the state. Hay supplies from last year and supplies from surrounding states have been adequate to meet the dairy needs.
Horticulture
It is too early to assess damage to the state’s horticultural crops. Of course, much is grown under irrigation and that production will be only affected marginally, said Dr. Jason Johnson of Weslaco, Extension economist. However, the dryland fruit and vegetable production, particularly in East Texas already has been hard hit. It is projected that farm value of watermelons and vegetables lost in this area could approach $33 million dollars. This would result in a statewide economic impact totaling $109 million.
Provided that irrigation water from the reservoirs on the Rio Grande River is available through July 15 to complete the critical watering for citrus, additional horticultural losses in the Valley may be postponed until August in hopes for a positive change in weather patterns and reservoir levels.
However, Johnson said, should the drought prevail and the acreage of fall vegetables be negatively affected, then the agricultural and associated economic activity losses could mushroom. Typically, the production value of the fall vegetable crops in the Rio Grande Valley exceeds $100 million.
Farm Credit
Most Texas agricultural lenders indicate it is still too early to tell the impact of this year’s drought on loan quality and performance.
“The exception is in South Texas where the effects are already severe and will get worse if the drought and high temperatures continue,” noted Danny Klinefelter of College Station, Extension economist. “The problem is being compounded by low market prices for crops.”
Throughout the rest of the state, the lenders indicating the greatest concern are in the dryland crop area.
“Weather conditions over the next month will make or break the dryland crop situation,” Klinefelter said. Any drought impact will be compounded if market prices continue to remain depressed. “For the most part,” he said, “cattle lenders are not experiencing the problems they saw in 1996 because of the wetter winter, lower grain and hay prices, and higher cattle prices.”
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