How Drought Affects Colorado's Agriculture Industry
An economic case study of the 2011-13 drought
Agriculture is a cultural and economic cornerstone in Colorado
Agriculture is part of Colorado's cultural fabric. For generations, Coloradan's have been working the land to provide food to the world.
Agriculture is a critical part of Colorado's economy. The industry contributes $41 billion dollars annually to the state economy and employs over 170,000 Coloradans [1].
Agriculture is a water-intensive industry
Growing crops and raising livestock is water-intensive business in a water-limited state. Agriculture consumes more water by volume than any other industry in Colorado [2].
During times of drought, dwindling water supplies impact production and financially strain the industry [3].
Colorado has a long history of drought: Agriculture is vulnerable but has always adapted
Due to Colorado's semi-arid climate, droughts are regularly occurring phenomena [4]. Since the state's founding, the agricultural industry has pulled through a number of severe droughts.
However, droughts continue to impact the livelihood of farmers and ranchers.
Low precipitation and hot temperatures from 2011-13 plunged Colorado into statewide drought
The maps below illustrate the onset of drought through time. Colors indicate drought severity.
Drought conditions started in 2011
As of July 2011, the southeast corner of the state was already experiencing severe to exceptional drought conditions
Things would get much worse ....
One year later (2012) approximately 75% of the state was experiencing exceptional drought conditions
Yet another year on (2013), drought conditions persisted
Over 50% of the state was experiencing exceptional drought.
Drought conditions lifted by the end of 2013
By December 2013 the majority of the state was no longer in the grips of extreme drought, though dry conditions lingered in the Arkansas River Basin.
The drought impacted crop production
With widespread drought conditions and insufficient water supply to satisfy increased crop water demands, production of Colorado's commodity crops was lower than normal from 2011-13. Reduced production was due to a combination of poor yields, failed acres, and modified planting decisions.
Drought conditions caused below normal production levels of major commodity crops.
Record high commodity prices provided some financial respite
The geographically widespread nature of the drought drove grain prices to record highs . Elevated crop prices in 2011 and 2012 eased some financial pain for crop producers, despite lower than average production. However, drought-related reductions in production left money on the table.
Commodity prices hit record highs between 2011 and 2013, coinciding with the worst drought years. Data source: USDA NASS
Drought conditions ravaged pasture productivity, straining livestock feed supplies
Pastureland is a critical and inexpensive cattle feed source for ranchers. Drought conditions decimated pasture productivity, rendering 81% of the state’s pastureland as being rated “poor” or “very poor”
2010
Vegetation productivity is perceptible in satellite images. Darker areas contain more productive vegetation than lighter areas.
During 2010 (before the drought) wet conditions maximized productivity across the landscape.
Draw your attention to Weld County, outlined in red, home to Colorado's largest cattle herds [5].
2012
Drought conditions decreased productivity during 2012. The reduction in productivity is especially notable in Weld County.
Decreased pastureland productivity forced ranchers to seek out alternative, and often more expensive, feed sources [6].
Lower pastureland productivity increased the price of feed for ranchers
Poor pasture quality caused feed prices to soar, making the cost to maintain herd sizes unfeasible for many ranchers. Colorado feed prices increased 45% from 2010 to 2011, which marked the beginning part of the drought in the southern part of the state. Feed costs remained over $400M higher than 2010 levels through 2014. In turn, ranchers turned to the market to sell-off cows and calves to feed lots and slaughterhouses. Including the increases in value in 2011 and 2014, this is a total drought-period loss of $134M.
Data source: USDA NASS, USDA ERS
“I hear of ranchers selling cows left and right these days. I guess that is the [drought] contingency plan: sell. It might take 10 years to rebuild numbers, but that must just be the cycle of land and livestock.” – Kyler J. Brown, Rocky Mountain Farmers Union, Drought Diaries [7]
In 2050, Colorado will be hotter and drier
Climate models predict the frequency and severity of drought is likely to increase in Colorado by 2050 [4,8].
Average annual air temperature is projected to increase by 3 to 4 degrees Fahrenheit. Regardless of changes to precipitation, increased air temperatures alone will increase aridity and disturb the seasonal cycle of water supply.
Under 2050 climate conditions...
Crop revenue losses in 2012 would have been 40% worse, totaling $639 million
Under 2050 climate conditions...
Farmers would have required 16% more grain to feed their herds in 2012, amounting to $200 million higher feed costs
What are producers doing to adapt?
In light of the changing climate, producers are adapting methodologies to mitigate drought risk and increase long-term environmental and economic sustainability. Here are a few examples of the steps Colorado's agricultural producers are taking to mitigate drought-related risk.
Crop producers are rethinking conventional crop rotation strategies.
Some producers are rethinking crop rotation strategies as a way of minimizing drought risk. The traditional cropping system for dryland wheat producers is winter wheat – summer fallow. In this system winter wheat is planted in the fall and harvested in the spring, with a typical growing season length of 9 months. Following harvest, fields are fallowed through the summer and the entire following year as a way of accumulating enough soil water for the next planting.
Recent research from the USDA Agricultural Research Service in Akron, Colorado suggest that continuous cropping rotations that incorporate less water intensive forage crops can mitigate the economic impacts of climate variability [9].
Crop producers are adopting no-till practices.
Keeping crop residue on fields is part of the no-till practice. Residue decreases erosion, increases infiltration, and retains soil moisture.
Conventional tillage practices, such as ploughing and harrowing, are meant to create an ideal environment for seed germination and root growth. However, over time, these practices are detrimental to soil sustainability and water retention.
In no-till crop production systems, tillage is eliminated because modified planting machinery places seeds directly into untilled ground. Accordingly, the soil structure is minimally disturbed and soils remain covered with a layer of residue from the previously harvested crop.
By leaving soils intact, no-till practices increase infiltration and minimize runoff, allowing more water to be stored in the soil. The veneer of crop residue left on the soil surface reduces wind stress, which lowers evaporation and erosion rates. Critically, no-till practices also reduce operation expenses such as fuel, labor and irrigation. For these reasons, no-till agriculture is emerging in Colorado as a leading adaptation measure to mitigate current and future drought risk [10].
credit: University of Wyoming Extension
Producers are diversifying revenue streams
For many small ranches, it is becoming increasingly important to find alternative sources of income, particularly in drought years.
At the state level, Colorado Parks and Wildlife runs the Ranching for Wildlife program [11], which provides extra income through hunting leases. This can be supplemented through private guiding and fishing services on the ranch (i.e., no state sponsorship).
Yuma County, potentially the renewable energy corridor of Colorado
Ranches can also lease out their land for renewable energy development. Wind farms in Yuma County are an example of Gov. Polis’s idea that the eastern plains can serve as “the renewable energy corridor for Colorado and the West” [12].
Additionally, farmers and ranchers rely on outside income to support operation. In some cases, off-farm income can be greater than on-farm income [13].
"But the reality may be that we'll have to go to the city and find work to make our payments if the drought doesn't improve." - Mike Nolan, Rocky Mountain Farmers Union, Drought Diaries [14]
Ranchers turn to the marketplace to manage herd sizes
Often a critical adaptation choice for ranchers is whether to reduce herd sizes, purchase increased feed, or pursue a combination of the two approaches.
During drought, many ranchers opt to sell herds rather than taking on increased feed costs.
During the 2012 drought and its aftermath, 41% of surveyed ranchers sold or were planning to sell livestock [15].
While selling during drought can supplement income and reduce feed costs, there are drawbacks: Transportation costs can make selling financially complicated. It takes time to rebuild a herd following sales. Also, sales occur when the market is full of supply, driving prices down.
References
- Davies, S., Davies, A., Goldback, B. & Sullins, M. The Contribution of Agriculture to Colorado’s Economy: An Executive Summary. (2012). Available at: https://www.colorado.gov/pacific/sites/default/files/CSU Executive Summary.pdf
- Colorado Water Conservation Board. Chapter 5: Water Demands. in Colorado’s Water Plan (2015). Available at: https://dnrweblink.state.co.us/cwcb/0/doc/197270/Electronic.aspx?searchid=d37a7960-b4ef-4ce5-9279-a1916ddc8f60
- Bauman, A., Goemans, C., Pritchett, J. & McFadden, D. T. Estimating the Economic and Social Impacts from the Drought in Southern Colorado. J. Contemp. Water Res. Educ. 151, 61–69 (2013).
- Cook, B. I., Ault, T. R. & Smerdon, J. E. Unprecedented 21st century drought risk in the American Southwest and Central Plains. Sci. Adv. 1, 1–8 (2015).
- U.S. Department of Agriculture. National Agricultural Statistics Service (NASS). (2020). Available at: http://quickstats.nass.usda.gov. (Accessed: 11th February 2020)
- Brown, K. J. Keeping The Dream Alive When Crops, Cows, and Cashflow are Suffering. (2012). Available at: https://www.rmfu.org/what-we-do/legislation/happening-now/the-drought-diaries/
- Irisarri, J. G., Derner, J. D., Ritten, J. P. & Peck, D. E. Beef production and net revenue variability from grazing systems on semiarid grasslands of North America. Livest. Sci. 220, 93–99 (2019).
- IPCC. Summary for Policymakers. Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (2014). doi:10.1017/CBO9781107415324
- Nielsen, D. C., Vigil, M. F. & Hansel, N. C. Evaluating Potential Dryland Cropping Systems Adapted to Climate Change in the Central Great Plains. Crop Econ. Prod. Manag. 108, (2016).
- Hansen, N. C., Allen, B. L., Baumhardt, R. L. & Lyon, D. J. Research achievements and adoption of no-till, dryland cropping in the semi-arid U.S. Great Plains. F. Crop. Res. 132, 196–203 (2012).
- Colorado Parks and Wildlife. Ranching for Wildlife. (2020). Available at: https://cpw.state.co.us/thingstodo/Pages/RFW.aspx. (Accessed: 13th February 2020)
- Rice, J. Governor calls plains ‘renewable energy corridor’. Sterling Journal-Advocate (2019). Available at: https://www.journal-advocate.com/2019/10/25/governor-calls-plains-renewable-energy-corridor/
- Service, U. E. R. Highlights From the February 2020 Farm Income Forecast. (2020). Available at: https://www.ers.usda.gov/topics/farm-economy/farm-sector-income-finances/highlights-from-the-farm-income-forecast/
- Nolan, M. Drought Diaries. (2002). Available at: https://www.rmfu.org/what-we-do/legislation/happening-now/the-drought-diaries/
- Pritchett, J., Goemans, C. & Nelson, R. Estimating the Short and Long-term Economic & Social Impacts of the 2012 Drought in Colorado. (2013).
