Purchase photos

Hays feedlot closing the gates next year

10/17/2012

By TIM UNRUH

By TIM UNRUH

Special to The Hays Daily News

Hays Feeders, a cattle feedyard located northwest of Hays, is closing when the last of the animals are hauled away sometime after Jan. 1, said Jerry Bohn, a stockholder from Pratt.

Bohn is the general manager of Pratt Feeders, an umbrella company that owns Hays Feeders and three other feedyards in Kansas and Oklahoma.

The decision to close Hays Feeders is "a function of the economics of the industry," Bohn said.

Two years of drought, which brought herd liquidation and high grain prices, caused "over-capacity in the cattle feeding sector," he said.

The feedyard near Hays was doing the least amount of business.

"It made more sense for (Hays Feeders) to be mothballed for now," Bohn said. "The short-term intent is to shut the facility down and hope the economics of the business get better."

A few of the company's 16 employees will be transferred to openings at other feedyards, he said.

A couple of employees will stay to oversee property in Hays, Bohn added.

"I think a couple (workers) have found other employment," Bohn said.

The basis for the lowest cattle supply in decades is drought, said Clayton Huseman, Ellsworth, executive director of the feedyard division for the Kansas Livestock Association.

But the planned closing of Hays Feeders doesn't necessarily signal the beginning of a trend.

"I don't think you're gonna see some epidemic in terms of Kansas feedyards closing," he said.

The cyclical business is adjusting.

"The supply of cattle is small. We've continued to consolidate feedyards," Huseman said. "We're not bringing as many head to market. The issue is, do we need all of that feedyard bunk space?"

Bohn and other stockholders intend to hang on to the property near Hays and wait on better times, but he expects the downward spiral to continue for two to three years.

"We need the drought to be broken and for ranchers to get back into the business," he said.

But as the cow-calf operations hold back more heifers for breeding, Bohn expects an even smaller supply of feeder cattle.

Meanwhile, the price of feed is a problem, thanks to a short supply and competition from other buyers, such as ethanol plants. There are several in the vicinity of Hays.

"We're not against ethanol per se. It's the government mandates and subsidies that the industry receives at our expense," Bohn said.

Cattle feeders can use the wet and dry distiller grains that are a byproduct of ethanol, but those prices follow the corn price. The grain is trading in the range of $7 to $8 a bushel.

While ethanol is in the mix, Huseman said, the ethanol production wasn't any higher this year compared to 2011, but the 2012 grain prices have been much higher.

This year's drought covered a majority of land where the U.S. cow herd is located, he said.

In years past, when bone dry conditions covered a smaller area, Huseman said, cattlemen could ship their animals from "dry to wet" regions.

Kansas remains a good location for feeding livestock.

Cattle generated $7.6 billion in cash receipts in the state during 2011, he said, with nearly 5 million head on feed -- second in the nation to Texas -- and represented one-fourth of the fed cattle in the United States.

But conditions are putting a squeeze on cattlemen.

Hays Feeders, with a capacity of 18,000 head, is one of 90 feedyards in Kansas with a capacity of 10,000 or more.

"We are gonna remain a competitive place to feed cattle, even in a drought," Huseman said.

But until rain returns, he said, "certainly there is pressure on the entire industry."