The Economics of GrazingThe Economics of Grazing

Leah DuzyLeah DuzyAgricultural EconomistAgricultural Economist

USDA-NRCSUSDA-NRCSMarch 12, 2008March 12, 2008

The Economics of The Economics of Prescribed Grazing is…Prescribed Grazing is…

the study of the economic implications of the study of the economic implications of alternative investments and management alternative investments and management decisions that change the:decisions that change the: Grazing System StructureGrazing System Structure Grazing Animal BehaviorGrazing Animal Behavior Grazing System PerformanceGrazing System Performance

The primary concern in economics is The primary concern in economics is efficiencyefficiency..

Economic AnalysisEconomic Analysis

Do the Do the benefitsbenefits of an investment of an investment exceedexceed the associated the associated costscosts over some specified over some specified time frame?time frame?

Is an investment worth making?Is an investment worth making? SystemSystem PROFITABILITYPROFITABILITY

Financial AnalysisFinancial Analysis

Does the business operator have the Does the business operator have the cash flowcash flow, or can he/she borrow under , or can he/she borrow under specified terms, to support making a specified terms, to support making a given investment and return an given investment and return an acceptable profit?acceptable profit?

Individual businessIndividual business AFFORDABILITYAFFORDABILITY

Why Use Rotational Grazing?Why Use Rotational Grazing?

Economic BenefitsEconomic Benefits Time SavingsTime Savings Environmental BenefitsEnvironmental Benefits Wildlife AdvantagesWildlife Advantages Increased Pasture ProductivityIncreased Pasture Productivity Aesthetics and Human Health BenefitsAesthetics and Human Health Benefits Animal Health and WelfareAnimal Health and Welfare

Economic BenefitsEconomic Benefits

Lower input costsLower input costs Reduced equipment, fuel, fertilizer, Reduced equipment, fuel, fertilizer,

pesticide, and labor costspesticide, and labor costs

Reduced maintenance costs of Reduced maintenance costs of confinement systemconfinement system

Time SavingsTime Savings

Time to move cattle is minimal if paddock Time to move cattle is minimal if paddock and fencing design is efficientand fencing design is efficient Average of 15 minutes per dayAverage of 15 minutes per day

Decrease in need for hayDecrease in need for hay Average of 7 hours per acre each seasonAverage of 7 hours per acre each season

Effective, efficient manure managementEffective, efficient manure management

Environmental BenefitsEnvironmental Benefits

Well-manage perennial pasturesWell-manage perennial pastures Decrease soil erosion potentialDecrease soil erosion potential Require minimal pesticides and fertilizersRequire minimal pesticides and fertilizers Decrease amount of barnyard runoffDecrease amount of barnyard runoff

Wildlife AdvantagesWildlife Advantages

Resting paddocks provide undisturbed Resting paddocks provide undisturbed nesting habitat for native grassland birdsnesting habitat for native grassland birds

Reduced pesticides help protect birds, Reduced pesticides help protect birds, mammals, aquatic invertebrates, and mammals, aquatic invertebrates, and non-target vegetation that may serve as non-target vegetation that may serve as wildlife habitatwildlife habitat

Increase Pasture ProductivityIncrease Pasture Productivity

Improve long term pasture quality and Improve long term pasture quality and fertility by favoring desirable pasture fertility by favoring desirable pasture species and allowing for even manure species and allowing for even manure distributiondistribution

Increase the amount of forage harvested Increase the amount of forage harvested per acre over continuous grazing by as per acre over continuous grazing by as much as 2 tons dry matter per acremuch as 2 tons dry matter per acre

High forage yields and quality results in High forage yields and quality results in healthier, more productive livestockhealthier, more productive livestock

Aesthetics and Human Health Aesthetics and Human Health BenefitsBenefits

Peaceful way of farmingPeaceful way of farming Quieter than mechanically harvesting feedQuieter than mechanically harvesting feed Wildlife viewingWildlife viewing

Animal Health and WelfareAnimal Health and Welfare

Healthier AnimalsHealthier Animals Reduction of exposure to Reduction of exposure to

high levels of high levels of microorganismsmicroorganisms

Increase physical fitness of Increase physical fitness of animalsanimals

Decreased opportunity for Decreased opportunity for injuries and abrasionsinjuries and abrasions

Fewer herd health Fewer herd health problemsproblems

Adoption HurdlesAdoption Hurdles

Cash-costCash-cost Large initial investment to set up a systemLarge initial investment to set up a system

Learning-curveLearning-curve Aversion to making costly mistakesAversion to making costly mistakes

PerceptionPerception Tradition or traditional attitudes get in the way Tradition or traditional attitudes get in the way

of adoptionof adoption

Two Keys to SuccessTwo Keys to Success

System Design/LayoutSystem Design/Layout Management – The Manager’s Management – The Manager’s

observation skills/attentiveness and observation skills/attentiveness and decision makingdecision making

What is the Goal?What is the Goal?

Maximize the on-farm harvesting of Maximize the on-farm harvesting of sunlight sunlight and rainwaterand rainwater by taking care of the soil. by taking care of the soil.

You take care of the soil by taking care of the You take care of the soil by taking care of the forage plants.forage plants.

You take care of the plants by having periods You take care of the plants by having periods of rest through the rotation of livestock.of rest through the rotation of livestock.

Through rotation, you take care of the Through rotation, you take care of the animals by providing them with higher quality animals by providing them with higher quality and more easily digested and absorbed and more easily digested and absorbed forages.forages.

4 Important Points4 Important Points

Too much grazing damages the plants Too much grazing damages the plants and soiland soil

Too little grazing decreases the quality Too little grazing decreases the quality and the quantity of forageand the quantity of forage

Appropriate levels of grazing maximize Appropriate levels of grazing maximize productivity and efficiency.productivity and efficiency.

The returns to management are far The returns to management are far greater than the returns to labor inputs.greater than the returns to labor inputs.

Livestock BudgetsLivestock Budgets University of Minnesota – FINBIN

http://www.finbin.umn.edu/ South Dakota State University

http://econ.sdstate.edu/Extension/Tools/budgets.htm Iowa State University

www.extension.iastate.edu/Publications/FM1815.pdf Kansas State University

http://www.agmanager.info/livestock/budgets/projected/default.asp

University of Tennessee http://economics.ag.utk.edu/budgets.html

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