Even 'trash' is expensive

"Gin trash" - unwanted parts of the cotton plant produced as a by-product of the region's many cotton gins - usually provides a cheap source of feed. But the drought has devastated the region's cotton crop, too. Even gin trash costs 10 or more times as much as usual.

Kellison has spent more than a decade breeding cows to produce more meat with less feed. Now, the fruits of his labor are in jeopardy.

"When I have to liquidate a 5- to 6-year-old cow that's in her prime, I've sold my factory," he says.

'Most of these cows have names'

Kellison says some in his situation are getting out of the business. "If you just look at the numbers, and there's no emotions involved, the thing to do is sell out and punt."

Livestock auctions have been busy this year as ranchers have sold off their herds.

He says it's a bad idea for a cattleman to get attached to his livestock, but, "most of these cows have names. They're what we take care of first."

So he and his family are holding on for now.

The good news for Texas ranchers is that their cattle are still getting fairly good prices at auction despite the glut on the market. That's helping many cattlemen get through the drought.

Rising beef prices

The bad news for consumers is that the rapidly shrinking beef herd means prices will likely be going up. And that herd will take years to rebuild.