Weathering the Drought

By Chris Clayton
DTN Ag Policy Editor

TEXHOMA, Okla. (DTN) — Dryland wheat in parts of Oklahoma was a disaster, but recent spring rains have helped farmers such as Jerod McDaniel feel the Southern Plains may be moving out of the long-term drought.

McDaniel farms a little more than 3,000 acres along the Oklahoma-Texas panhandles, of which about 1,800 acres are irrigated. He also has nearly 7,000 acres of grassland for grazing. At 38, McDaniel feels a little hardened as a farmer because he has managed the last four crop years dealing with drought.

Winter wheat did not turn out well for Oklahoma farmers, according to USDA’s latest production report. Harvest was cut in half with yield declining statewide from 31 bushels an acre last year to 17 bushels per acre this year. Production dropped from 105.4 million bushels to 51 million bushels. The yield and production were actually worse than 2011 when yield hit 22 bpa and production was 74.8 million bushels.

McDaniel noted he opted not to harvest his 1,300 acres of dryland wheat this year because of the expected low yield. Instead, McDaniel is putting his cattle out on those wheat acres to graze.

"We didn’t cut an acre of dryland," he said.

DTN first visited McDaniel as the drought in the Southern Plains was beginning to peak in August 2011. The wheat circumstance was about the same then, but soil moisture conditions on some of his fields have improved dramatically this spring. McDaniel’s farm has seen anywhere from 5-7 inches of rain since May. That has been common around the region. Light showers were scattered across the Texas and Oklahoma panhandles on Thursday, as well as in southwest Kansas.

"The climate flipped and we started having more rain," McDaniel said. "We have probably saved a month of irrigation water. It’s just nice to be on the other end of the spectrum."

McDaniel said he got about an inch of rain Thursday on some fields as temperatures fell into the 50s. With temperatures becoming more normal for mid-July — hot and dry — he added, "It really helped, especially with this heat coming up this week."

Three years ago, McDaniel first saw his corn die under a center pivot. That was a new experience, but it prompted him to think about better ways to manage through a drought. He reduced his planting populations and irrigated acres by cutting his pivot turns to half circles. He also has cut back on his corn acres.

"I just put less into corn and more into milo," McDaniel said. "You know, I’m just trying to save some water."

When corn peaked in price, McDaniel felt he lost out on the higher end of the market by forward contracting early. He has stuck with his strategy, though, and now sees better expected returns because he contracted earlier in the year to sell a good percentage of his corn crop in the $5-a-bushel range.

"Now that corn is $3, I’m selling it for $5," he said. "I guess it evens out."

Drought started in the fall of 2010 in the Southern Plains and largely has continued ever since. As of Thursday, the U.S. Drought Monitor still showed most of Oklahoma as being in some stage of drought. Parts of the panhandle and western Oklahoma are still considered as being in extreme or exceptional drought conditions.

"That first year, not knowing, was probably the worst," he said. "The benefit that comes from it, like everything, is you learn with what you can get by with. Probably, I am a better farmer having gone through the drought. You get thicker skin."

While the drought devastated some ranches and thinned the national cattle herd, McDaniel said he was lucky to be able to hold on to most of his cattle and now is able to take advantage of a higher cattle market. He has about 350 cow-calf pairs.

"It paid to feed them through the drought," he said. "That’s another thing. You just don’t know what’s going to work while you are in it. Looking back, after the fact, I’m feeling pretty good about it. Now the drought could have kept going and we could have a massive feed bill with nothing to show for it."

Going forward, McDaniel wants to increase his corn silage acres to expand his cattle herd. He thinks corn prices could be moving to a longer-term decline. "It may be it’s simply more profitable to run that corn through cattle now," he said.

"Luck kind of helps as much as anything."

Chris Clayton can be reached at chris.clayton@dtn.com

Follow Chris Clayton on Twitter @ChrisClaytonDTN

(AG/CZ)