A Long Term Economic Analysis of Grazing, Haying and Cropping Marginal Highly Erodible Crop Land in Southcentral North Dakota

Paul E. Nyren, Bob D. Patton, and Brian S. Kreft, NDSU Central Grasslands Research Extension Center and David Lambert, NDSU Agricultural Economics


 

Table of Contents


 

 

Highlights


Ten-year average returns to land, labor and management for the three enterprises show a return to the cash crop of $1.58/acre, the grazing of reseeded marginal land $44.39/acre and haying $30.16/acre.

 

The goal of this study is to record actual input costs for cropping, grazing and haying marginal lands. These costs are, whenever possible, calculated from actual costs, such as the cost of fertilizer, herbicides, etc. In other instances where actual costs are not available, estimates are used that closely reflect actual input costs. For equipment and operator costs for cropping and haying, custom farm rates are used, as they are a fair reflection of the costs involved in depreciation, repairs and operator’s time. Costs for land taxes and government disaster payments are not included in the calculations.


Procedure


The study site is classified as marginal highly erodible land (HEL) by the Natural Resources Conservation Service. This land was seeded in 1985 to a mixture of tall wheatgrass, intermediate wheatgrass, sweetclover and alfalfa. In 1992 the land was subdivided into a 135-acre season long treatment and a 235-acre twice-over rotation grazing treatment. In 1998, the twice-over rotation system was changed to a three-pasture rotation system in that the pastures were grazed once rather than twice. Ninety acres of CRP land adjacent to the grazing systems are cut for hay each year. These acres were also seeded in 1985 to the same species used in the grazing study. Exclosures are set up on silty sites and are neither grazed nor hayed. These unused areas serve as a control treatment to which the grazed and hayed treatments are compared.


Crop Farming on Marginal Highly Erodible Land


The annual crop is grown on 80 acres on section 22 of the Research Center. This area is also classified highly erodible marginal cropland due to its rough topography and sandy, gravely soils. Experience has shown us that on light soils the earlier a crop can mature the more likely it will be to produce an adequate yield. The best yield ever obtained on this field was a crop of sweetclover chopped for haylage in late June 1990. With this in mind this field was seeded to winter wheat in the fall of 1999 and harvested in 2000. Oats were planted in 2001. Table 1 shows the costs for raising and harvesting the winter wheat, oats and the ten-year average costs for the small grain/annual forage crops. The largest cost over the ten-year period is the land cost. This figure comes from data compiled by the NDSU Extension Service. Throughout this article these costs will be used. Since this study is conducted on the eastern edge of Kidder County and the western edge of Stutsman County, the two counties’ rental rates are averaged for both cropland and pastureland. The next most costly item is fertilizer and its application. Total production costs for the oat crop were $90.31 in 2001. Ten- year average per acre costs for raising the small grain crop totaled $90.16 (table 1).


Table 1. Costs/Acre for Small Grain and Annual Forage Crops


 

Average

1992-1999

Winter

 Wheat

2000

Oats

2001

10-YR.

Average

Seed

$4.92

$7.50

$4.95

$5.18

Fertilizer/Application

$7.70

$13.29

$13.10

$8.80

Herbicide

$11.96

$3.19

$2.35

$10.12

Herbicide Application

$2.95

$3.61

$3.94

$3.11

Deep Chisel

$4.67

$5.58

$5.54

$4.85

Field Cultivation

$3.13

$0.00

$0.00

$2.51

Seeding

$5.99

$8.93

$8.73

$6.55

Swathing

$4.58

$5.04

$5.09

$4.68

Mowing

$0.00

$0.00

$0.00

$0.00

Land Costs

$26.99

$27.30

$28.15

$27.14

Piling & Packing/Stacking

$0.76

$0.00

$0.00

$0.61

Harvesting/Baling

$13.12

$13.82

$14.14

$13.29

Hauling

$3.28

$2.74

$3.36

$3.24

Rock Picking

$0.00

$0.00

$0.96

$0.10

Total Small Grain Costs

$90.03

$91.00

$90.31

$90.16

 

Table 2 shows the returns for the annual cropping enterprise. In 2001, oats yielded 35.79 bu/acre and the value on the date of harvest was $1.10/bu. resulting in a gross return per acre of $39.37. When the cost of production is subtracted the oats lost $50.94/acre.


Table 2. Returns/Acre for Small Grain and Annual Forage Crops

 

Average

1992-1999

2000

2001

10-Year

Average

Crop


-

Winter Wheat

Grain

Oats

Grain


-

Acres

80

80

80

80

Yield-bu. or Tons/A

-

27.42

35.79

-

Price/bu. or /Ton

-

$2.07

$1.10

-

Deficiency Payment

$0.00

$0.60

$0.00

-

Gross Return/A

$66.68

$73.21

$39.37

$64.60

Total Cost/A

$90.03

$91.00

$90.31

$90.16

Returns Small Grain

- $23.36

- $17.79

- $50.94

- $25.56

 

 

Grazing Marginal Highly Erodible Land


One hundred and forty-eight cow-calf pairs grazed 370 acres of reseeded marginal land in 2001. While precipitation was below normal during April and May, forage production on the study site was good, with ample residual vegetation standing at the end of the grazing period. Average forage production for the ten-year period totaled 2,764 lb/acre on the season long pasture and 3,322 lb/ac for the rotation system. For the past three years these pastures have been grazed in a complementary system with native range on the Research Center. When the grazing season was shortened to accommodate the new grazing system the number of cow-calf pairs was increased to maintain a similar stocking rate. For the purpose of this analysis, costs for the native pastures are included in the land costs and are calculated on the basis of 1.3 acres/animal unit month (AUM) grazing at a rental rate of $11.60/acre.


Again in 2001, land and winter feed were the two highest costs for maintaining the cow herd. Feed costs per cow in 2001 totaled $78.84 compared to $63.60 per cow in 2000. For most estimated costs a 3% increase was applied to last year to cover inflation. The exception was fuel and electricity, which were increased 6% from 1999. Total per head costs for the year were $341.16, (table 3) which included the cost of maintaining the bulls and replacement heifers.


The calves were weaned on October 8 with the steer calves averaging 555 lbs/head and heifer calves averaging 512 lbs/head (table 4). The value was calculated based on local livestock sales with 550 to 600 lb steers bringing around $0.97/lb and 500 to 550 lb heifers bringing $0.93/lb. The cows weighed 1406 at weaning and cull cows brought $.37/lb at that time. The last line in table 4 indicates the returns to the livestock grazing system. The $40.58/acre or $136.47 per cow reflects the net return to the system.


Table 3. Costs Per Cow and Per Acre


Year

Average

1992-99


2000


2001

10-Year

Average

Acres

370

370

$370.00

370

No. of Head

100

139

$148.00

108

Fuel & Elec.

$38.93

$44.33

$46.99

$40.27

Dep. bldg. & Equip.

$15.05

$16.34

$16.83

$15.35

Feed

$91.21

$63.60

$78.84

$87.21

Salt & Mineral

$9.44

$10.57

$10.89

$9.70

Replacements

$29.94

$16.30

$15.99

$27.18

Bulls

$10.79

$10.05

$10.18

$10.65

Veterinary

$5.61

$6.32

$6.51

$5.77

Marketing

$4.04

$4.35

$4.48

$4.12

Labor

$17.37

$20.99

$20.99

$18.09

Land Costs

$115.50

$114.57

$118.87

$115.75

Death Loss

$8.80

$8.74

$10.60

$8.97

Total Cost/Cow

$346.67

$316.15

$341.16

$343.07

Total Costs/Acre

$93.23

$118.77

$136.47

$100.11

Total Herd Costs

$34,496.49

$43,945.42

$50,492.25

$37,040.96

 

 

Table 4. Livestock Returns

 

Average

1992-99


2000


2001

10-YR.

Average

Acres

370

370

370

370

Heifers

29

39

45

30

Avg Wt.

516

539

512

519

Price/Lb.

$0.76

$0.90

$0.93

$0.77

Return-Heifers*

$10,861.47

$17,972.96

$20,355.84

$12,522.06

Steers

51

73

76

56

Avg. Wt.

559

563

555

559

Price/Lb.

$0.81

$0.95

$0.97

$0.84

Return-Steers*

$22,029.19

$37,091.85

$38,868.87

$25,219.42

Culls

17

27

27

19

Avg. Wt.

1304

1340

1406

1318

Price/Lb.

$0.38

$0.36

$0.37

$0.37

Return Culls*

$7,922.08

$12,373.56

$13,343.64

$8,909.38

Total Returns

$40,812.74

$67,438.36

$72,568.35

$46,650.86

Opportunity Costs

$4,051.66

$5,464.55

$7,061.74

$4,493.95

Total Herd Costs

$34,496.49

$43,945.42

$50,492.25

$37,040.96

Total Cow Costs/A (table 3)

$93.23

$118.77

$136.47

$100.11

Net Returns/A

$6.12

$48.73

$40.58

$13.83

* =Less 5% shrink

 

 

 

Haying Marginal Highly Erodible Land


The yields on the 90 acres that were hayed were slightly below average. Table 5 shows the averages of the ten years of the study. If the yields of 1992 are not considered (the first year when much of the yield was the result of past years’ production) then the 10-year average yield is 1.8 tons/acre. The yield for 2001 was slightly higher at 2.0 tons/acre. In 2001 the hay was valued at $30/ton, up $5 from 2000. Results of this study show that the haying portion of the study returned $2.30 per acre in 2001 down slightly from the ten-year average but up $9.95 from 2000.

 

 

Table 5. Costs and Returns for CRP Hay

 

Average

1992-99


2000


2001

10-YR.

Average

Acres of Hay

90

90

90

90

Avg. Bale Wt. (Lbs.)

1390

1536

1540

1420

No. of Bales

237

206

233

233

Land Costs/Acre

$26.99

$27.30

$28.15

$27.14

Mowing/Acre

$5.36

$7.44

$6.83

$5.71

Baling/Bale

$5.13

$5.39

$6.72

$5.31

Stacking-Hauling/Acre

$5.20

$4.52

$5.12

$5.12

Total Costs

$4,581.54

$4,643.94

$5174.89

$4,647.12

Costs/Acre

$50.91

$51.60

$57.50

$51.63

CRP Hay Value/T.

$32.25

$25.00

$30.00

$31.30

Gross Returns

$4,982.33

$3,955.20

$5382.30

$4,919.62

Net Return/A.

$4.45

-$7.65

2.30

$3.03

 

 

Conclusions


Tables 1 and 5 have included a line for land costs. The cost used for land includes the average values for rented land as compiled by the NDSU Extension Service and was derived by averaging the land rental values for Kidder and Stutsman counties as the study site is located in both. Where possible labor costs were estimated for all activities except the custom rates where the labor is part of the overall charge and could not be extracted. These charges constitute the cost for land, labor and management and are often not subtracted from the returns for ranch operations.


Table 6 summarizes the returns to each of the enterprises on the study. The second half of this table shows the returns without deducting the cost of land and labor and is usually referred to as return to land, labor and management. This figure more closely reflects what most producers would consider their “bottom line”. Grazing is clearly the most profitable enterprise on this type of land. There are 13 million acres of rangeland in the state of North Dakota. Long term research evaluating grazing systems shows that 1.5 to 2.0 acres of good to excellent condition rangeland in North Dakota are needed to adequately maintain a cow and her calf for one month (AUM). Thirteen million acres of rangeland equates to approximately 6.5 million AUMs of grazing in the state per year. At an average conservative cost of $205.00 per AUM, this translates to approximately $1.3 billion that is spent annually in communities and businesses throughout the state.

 

 

Table 6. Annual and Ten-Year Average per Acre Returns to Land and Management for each Enterprise/System on the CRP Study.

 

Average

1992-99


2000.00


2001

10-Year

Average

Net Return to System 

Cash Crop

- $23.36

- $17.79

- $50.94

- $25.56

Grazing

$6.12

$48.73

$40.58

$13.83

Haying

$4.45

- $7.65

$2.30

$3.03

Return to Land, Labor, and Management 

Cash Crop

$3.63

$9.51

- $22.79

$1.58

Grazing

$37.40

$76.03

$68.73

$44.39

Haying

$31.44

$19.65

$30.45

$30.16

 

 


Table of contents

  
NDSU Central Grasslands Research Extension Center
Home | Livestock Research | Economics Research | Range Research | 2001 Annual Report