Even though cattle prices have been good for the last few years, the economics of ranching hinge on being able to buy or rent pasture at an affordable price. Higher land prices and rental rates squeeze the rancher’s bottom line. Further compounding the problem are the high costs ranchers incur when they take their livestock to the feeder—the last step in the cattle-rearing process when the animals are fattened on that increasingly valuable commodity: corn. Cattle feeders simply pass on their higher corn prices to ranchers. If a perfect storm of high pasture values, high feeder costs, and a collapse in cattle prices occurs, many ranchers in the Prairie Pothole Region may be driven out of business.
The livestock industry is native prairie’s “reason for being,” at least in an economic sense. If that industry were to disappear today, no obvious economic return could then be realized from native prairie grasslands. Yet history tells us that some creative mind will find a way to make money from the land. If this new industry does not involve keeping the grass “right side up,” what then for the waterfowl that have been nesting on this prairie for the last 10,000 years?
The expansion of corn for ethanol may also have unintended and unforeseen consequences for that other critical element in the duck production equation—wetlands. Currently, millions of wetlands in the Prairie Pothole Region are protected by a strong disincentive within the federal Farm Bill. Very simply, if farmers choose to drain a wetland, they disqualify themselves from all Farm Bill programs, including commodity payments that compensate them for low yields and low crop prices. To date, this disincentive has been very effective at protecting wetlands from drainage. But its effectiveness hinges on low or volatile commodity prices and the need for farmers to manage their risk in the face of these circumstances. If prices for corn increase and remain stable, as they might under a long-term contract to supply an ethanol plant, some farmers may not need or expect to receive commodity payments. That scenario effectively removes the protection afforded wetlands, and widespread wetland drainage could be the result.