Impact of Drought on Ranchers

Drought hurts ranchers and herders by reducing the food supply they depend on which forces them to either sell their animals at a discount or buy abnormally expensive food both of which increase their costs or reduce revenue. This combination can cause a net loss for the year.

Multiple advisory groups are warning ranchers to avoid increasing their herd size due to risk of 2013 drought. Other articles are comparing the mid-west drought of the last few years to the 1950s. It not a question of if the next drought will occur but rather when which makes every decision to increase herd size in areas affected by drought a calculated risk.

It is a re-occurring theme where ranchers increase their herds through the good water years and just about when things are looking great a drought hits and they are forced to sell many of their animals at a substantial discount which costs them a large amount of their savings and profits for the year. Even a productive rancher can be threatened by multiple droughts which can impair their ability to pay mortgages and other debts which places their entire ranch investment at risk.

Emergency Financial aid too little / too late

USDA support and crop insurance can help recover some of the financial losses incurred by ranchers forced to sell their animals at distressed prices. Unfortunately this financial aid and even USDA's additional grazing lands only partially offset the cost of the drought. They certainly do not cover the profit the farmer needed that year.

A new drought mitigation strategy needed

A new strategy that can reduce the ability of a drought to force ranchers and herders to liquidate their animals is needed. Crop insurance picks up part of the losses during drought but never covers the full loss and only arrives after immense pain and wasted effort of the farmer.

Permanently reducing herd size is not attractive

It is not economically attractive for ranchers to permanently reduce their herds to the drought carry capacity because they make their profit by the head. If they have fewer animals they make less money which they need to buy the next round of equipment, pay their employees and produce a viable income. As a result during the good years they will increase their herd which will increase their risk of repeated losses from the next drought. One senator calls Farming one of the riskiest investments due to this cycle.

A permanent solution is needed

A process which can permanently reduce the financial impact of drought is needed. The A2WH Grow Dryland process is one component of a plan to increase drought resilience by providing a auxiliary food supply which augments normal grazing foods during drought conditions. The Grow Dryland process can also increase grass yields during the good years which will increase their normal year profits.

The real value of water during drought

When a farmer it loosing animals due to lack of viable (cost effective) food the value of water A2WH can supply could be the entire value of his farm, land and animals which could easily run into the millions.

If the farmer cannot earn enough during drought years to pay the mortgage on his land and equipment it places his entire investment and quite often his life savings at risk. This allows the drought to destroy his ability to produce an income from the land and can force them accept sub-standard jobs in the city.

The A2WH Grow Dryland process is designed to act like a form of insurance but rather than providing financial relief after the fact the A2WH Grow Dryland process can help the farmer feed his animals through the drought and possibly even expand. In this way the rancher can turn drought conditions into an opportunity to expand and increase their income.

Unlike normal crop insurance which is a net cost during good years the A2WH Grow Dryland process can provide real tangible benefits every year. This comes in the form of nitrogen rich foliage that can be used as mulch or compost to improve the water retention and nutrient component of the soil for their prime grasslands. This has been shown by a number of studies to more than double grass production especially on marginal rain fed land. The increased grass yield will occur in all years but will be even more prevalent during low water years due to better moisture holding capacity. The increased grass yield will yield profits every year as increase weight for the cattle they sell. The Grow Dryland process is not intended to be used as a replacement for crop insurance but it may eliminate or reduce the need to make drought related claims against the insurance.

The Grow Dryland process was invented to create an auxiliary food supply for ranchers and herders that would provide a crop of edible forage during the worst drought. which can extend forage time and reduce amount of feed that must be purchased.

Drought Resistant alternate food supply

We felt the best way to mitigate the effect of drought was provide a cost effective means of growing an alternate fodder supply that was drought resistant and which would provide additional food on the same land during drought but could be used to increase nutrient loading and moisture retention during the good years to increase the total food supply.

Requires forward planning

The Grow Dryland process can deliver a critical component to reduce the financial impact of drought but it requires a multi-year investment by ranchers so they are ready for the drought when it occurs.

Carry herd through drought without weight loss

This extra food supply can provide the rancher with the ability to carry the herd for longer without the weight loss normally associated with reduced forage supply during drought.

Reduce need to purchase feed

The additional on-ranch food can reduce the amount of feed the rancher must buy while retaining a larger number of healthy animals which reduces the number of animals the rancher will be forced to sell at a discount.

Sell animals after drought at premium

If this extra food supply allows the farmer to carry the herd through to the end of the drought then they can sell the same animals at higher price as other ranchers who did not prepare attempt to restock their herds and drive prices up.

Use drought as cheap time to expand herd

Smaller ranchers who normally carry a minimal herd can focus on building the alternate forage supply during good years could buy distressed animals at auction possibly at a 80% discount compared to normal prices and use the additional food supply to nurse them back to health and resell a couple years later at the end of the drought at premium price substantially above normal price for those same animals.

A2WH Grow Dryland Benefits

Need Water then use A2WH

Extracting Water from the Humidity in Air

Use inexpensive dryland as part of the solution

The Grow Dryland process allows ranchers and farmers to plant forage trees on land where they would previously not have been able to survive. Since this can be done on land where no irrigation water is available the farmers can lease or buy inexpensive land for this purpose.

Produce 36,000 pounds of feed per acre on land with no water

It varies by climate but on many parcels it is possible to support 180 trees per acres as long as there is over 4 inches of rain per year. Once the trees are mature and depending on the species the edible foliage from 180 trees per acre can deliver 36,000 pounds of dry matter per year. These trees have very deep root systems so they will produce a viable crop of forage even during drought years. Some tree species can deliver several times more bio-matter but it can be a tradeoff between bio-matter production, early growth rates and timber values. In many instances the trees would only be planted along fence lines, ridgelines and other low production areas while leaving the primary grazing land available for grass.

Low effort process

This is a low effort and low resource process. When the forage is not needed it can simply be left in place or gathered into large composting heaps that can be used as mulch for the prime grassland.

Timber value can pay for entire system

Once every 10 to 15 years they also have a lumber harvest that could provide nice profit over the land and planting costs even if they never use the forage.

2.1 million $ profit from a single drought

A 200 acre parcel planted with this approach ends up producing 7.2 million pounds of edible dry matter per year. When budgeting 25 pounds per cow per day 7.2 million pounds is enough to feed 1,600 cattle for 180 days or 800 cattle for a year. This implies an ability to support 4 cattle per acre of from the new forage source which is considerably better than the grazing rates for non-irrigated parcels for many parts of Texas. The 2012 price in Austin was $3,000 per cow in a market where a couple years earlier they where selling distressed animals at $1700 which shows $1,300 difference in gross sales. If fodder trees from 200 acres allowed them to carry 1,600 cattle through to the end of the drought then it would be worth 2.1 million dollars in revenue they would otherwise have lost.

Dryland still cost effective

During 2013 a 160 acre parcel near Hudspeth Texas was selling for $59,437 or $371 per acre so the dryland is still cost effective. There is a planting cost for the A2WH Grow Dryland process but that cost is likely to be recovered from increased sales value of the land and is likely to be less than the likely return from a single drought. The increased grass growth from the nitrogen rich mulch will likely pay for the entire system and land from increased sale weight ofthe cattle on that land.

A2WH ideal in isolated locations

A2WH is designed for used in locations where there is a need for water and there is no surface water available, when common water sources such as new wells, recycling irrigation and municipal supplies can not supply the water needed.

A2WH ideal on land without water rights

A2WH is ideal in situations where ground water rights are not available or where pumping additional ground water would be cost prohibitive or risk over drawing the local water table. It is the ideal solution when droughts have drastically reduced the amount of water available and when it would be infeasible to desalinate the water at the coast and pipe it in.

Agriculture water is moving to Cities

As more and more water is taken from agriculture to support cities it will leave more fields that have been irrigated in the past without water. The A2WH grow Dryland process is designed to convert land where water is not available and where insufficient rainfall is present to grow a normal crop. It can allow large amounts nitrogen rich mulch which can also be used as a alternate supply of food for Cattle and Sheep. It can allow unproductive land to deliver a valuable crop and kept in productive use even after the water has been taken from this land for use in the cities.

A2WH.com 206-601-2985 or email Us at info--AT--A2WH.com

A2WH uses a proprietary process of extracting the humidity in the air and converting it into liquid water using renewable solar energy largely in the form of solar heat.    A2WH (Air to Water Harvest)  is a new generation of atmospheric water generator device AWG) which are also known as water maker devices (WM) and Water Air Extraction Devices (WAED). A2WH uses a revolutionary patented design that provides special characteristics that make it ideal for large scale deployment in situations where historic designs would be prohibitively expensive.

Contact us for more information

 

Call 206-601-2985. or Send our sales department an email.

(C)  A2WH.COM  -JAN-2009-  All rights Reserved This discussion contains forward looking statements which are based on current expectations and differences can be expected. All statements and expressions are the opinion of management of A2WH and are not meant to be either investment advice or a solicitation or recommendation to buy, sell, or hold securities.   Many of these statements are based on sound economic reasoning,  however actual response of the economy is heavily influenced by politics and large business and so the outcome could end up substantially different.