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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