Many of the Texas cattle ranchers lost their cattle and ranches, after last year's drought. I don't recall the rancher's being referred to a suicide hotline, though.
I’m surprised California doesn’t refer them to an assisted suicide hotline.
That’s because the ranchers can come back. As long as they still retain some herd genetics and the land, they can rebuild. Many of those Texas ranchers didn’t lose their land - they own that outright and they own a bunch of land.
The California dairy model is so capital-intensive that most of these guys are pretty heavily leveraged and they depend on making a pretty thin margin on a very big cash flow. In many cases, they have a note on the land, which they’ve used to build more buildings or facilities, a revolver they use for month-to-month expenses like feed and with the prices of feed. When the margin on that monstrous cash flow goes negative, they’re bleeding like stuck pigs - and not all at once in a seasonal event like the rancher. I’m talking every single day, they’re bleeding cash out their eyeballs.
When we sold hay to California dairymen, the hay would leave our outfit at about $140/ton, then get $40/ton of haulage tacked onto it, or about $170 to $190 by the time it got to the dairies.
Right now, thanks to the feed shortage across the entire western US, even rough hay is up near $200/ton, and to get hot alfalfa hay into those dairies, you’re looking at prices over $260/ton. And, NB, this is the CHEAP time of year on hay. Come February, when hay stocks start getting low, the price will go up - and this year, I’d expect dairy quality hay in Chino to be upwards of $350/ton, delivered, assuming diesel prices stay stable, which they’re not.
Now, let’s talk about diesel costs: Diesel costs hit the dairyman to get his milk hauled off and hay and feed trucked in. Ranchers get hit on diesel costs while putting up their own hay, getting hay trucked in (usually only once/year) and shipping their cattle (usually only once/year). Dairies have to haul in hay there in California every week. Those 8,000 cow dairies don’t have a lot of land on which they can store hay, so they have a few “trainloads” (double trailer) pulled in every couple of days. Every dairy cow eats somewhere about 20 to 30lbs of hay per day, so if you’re running a 8,000 head dairy, that comes to 120 tons/day, or about four double-trailer trucks of hay per day. Ranchers don’t have that kind of cash bleed.
Now the diesel cost spikes are kicking you in the head - hard.
Here in Colorado, I’ve seen on-road #2 diesel go from $4.09 to $4.39/gal in three days. The last jump was from $4.24 to $4.39 overnight. When diesel goes over $4/gal, the US economy shifts into low gear in a hurry. The moron economists blather on and on and on and on and on and on and on and on and on about gasoline prices.
Well, here’s the hard truth that none of these moron academics realizes or admits:
Come Thanksgiving, you get to Grandma’s house on gasoline.
The turkey gets there on diesel fuel.
Right now, diesel costs are going to kick a whole lot of small businesses in the head - hard.