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Potential Economic Impact of Research Conducted by the Central Grasslands Research Extension Center

Lance L. Brower, Extension Agent, NDSU, Logan County


Summary

The objective of this study is to measure the potential economic impact of research conducted by the Central Grasslands Research Extension Center (CGREC) on the Coteau region of North Dakota. Information from four articles published in the Center’s 2006 Grass and Beef Research Review was analyzed for possible economic implications for farmers and ranchers in the region. Analysis was done using IMPLAN Pro, a regional input/output computer program. All four studies showed positive potential economic stimulus to the Coteau region if farmers and ranchers were to implement the practices discussed in these articles. The total potential economic impact to the Coteau region is estimated to be more than $98.1 million.


Introduction

The Missouri Coteau region of North Dakota is considered by some to be the “Red River Valley” of livestock production. Consisting of gentle, rolling hills, this landscape was created by receding glaciers about 10,000 years ago. Although some of the land has been converted to crops, this highly erodible ground is prime land for grazing livestock. In 1977, the North Dakota Legislature established the CGREC northwest of Streeter to address research and education needs in this unique area of North Dakota.


Since that time, important research at CGREC has focused on the Coteau area. This research has led to a better understanding of the land and has helped producers to develop best management practices in order to maintain and improve land quality. In turn, better land management has led to increased forage and livestock production, improved soil and wildlife conservation, and other positive impacts. But what economic impacts has CGREC had on the region? In conversation with others, I wondered if people who own local businesses (and others) know how important the CGREC is to their business.


Methodology

In reviewing the 2006 Grass and Beef Research Review, I found four articles that have measurable economic information for the region if the practices outlined in the articles were implemented by area farmers and ranchers. The data were analyzed using IMPLAN Pro, a regional input/output computer program. This peer-reviewed economic model was used to establish the potential economic value to “Main Street” of implementing the practices. The study area, the Missouri Coteau, consists of 18 counties covering 26,095 square miles, with 11,935 total farms. Of these farms, 5,036, or 42%, have cattle.


The first article, “Evaluation of Perennial Herbaceous Biomass Energy Crops in North Dakota,” evaluates agronomic practices used to maximize production of biomass, outlines the effect of carbon sequestering, and provides an economic analysis of production costs. Using economic analysis and research by the USDA Agricultural Research Service in Mandan (Berdahl et al., 2005) that examines yields of various perennial grasses associated with biomass production, I constructed a model to predict the potential economic effect on the Coteau region. This region includes 1,257,402 acres of hay ground.


Another article, titled “Long-Term Ecological Grazing Intensity Research in the Missouri Coteau of North Dakota,” examines the optimum stocking rate of beef cattle on the rangelands of the Coteau region. According to the National Agricultural Statistics Service (NASS), there are 4,167,520 acres of rangeland in the study area.


The third study used in the economic model is “Livestock Management in a Whole-Enterprise Management System,” which examines the economics of selling calves at weaning verses backgrounding or finishing cattle in the Coteau region. In 2002, there were 54,379 calves at 500 lbs. or less sold in the region and 15,540 calves that producers backgrounded.


“Drought Stressed Rangeland—What to Expect for Forage Production in 2007” is the last article used in the model. I used the same value of 4,167,520 acres of rangeland as above. The study indicates that overgrazing this land can cost the producer between 5% and 35% of possible forage production. For the purposes of this economic study, I assumed an average loss of 20% of possible forage production. Readers are encouraged to read the original articles at http://www.ag.ndsu.nodak.edu/streeter/ to gain more information.


The assumptions upon which my economic analysis was based are as follows: all farmers and ranchers would use the practices addressed in the four articles, and all businesses would spend money (in 2004 dollars) according to the model. We know that not all farmers and ranchers would implement these practices, but these assumptions enable us to measure potential.


Definitions

The definitions used in the study are as follows.

Direct impact: economic change to businesses in which initial change was made (e.g., farmers and ranchers use trucks, machinery, fuel, financial services and many other inputs to conduct business).

Indirect impact: economic change to businesses as a result of direct economic activity (e.g., the seed company pays for shipping of the seed to a trucking company).

Induced impact: household spending by employees and owners of businesses due to direct or indirect changes (e.g., employee buys groceries for home use).


Results


Charts 1 through 4 represent each of the four articles analyzed from the 2006 Grass and Beef Research Review. Charts 5 and 6 show the total potential economic impact to the Coteau region based on those articles.

 

Chart 1

 

 

 

Chart 2

 

 

Chart 3

 

 

Chart 4


 

 

Chart 5

 

 

Chart 6

 

 

Conclusion

The CGREC not only did important research in 2006, but taxpayers, farmers, ranchers, and other businesses in the Coteau region got their money’s worth, and more. If farmers and ranchers followed the research-based practices outlined in the four cited studies:

   Direct spending to businesses would be more than $70.8 million

   Indirect spending to businesses would be increased by more than $25.1 million

   Employees would spend more than $2 million

   The total impact on the Coteau region would be more than $98.1 million.


Collecting this type of data in future years is important to the CGREC to educate stakeholders and other citizens in the Coteau region about the importance of research conducted by CGREC and the North Dakota State University Extension Service. This education could lead to more grassroots and political support for the CGREC.●


References

Berdahl, J. D., A. B. Frank, J. M. Krupinsky, P. M. Carr, J. D. Hanson, and H. A. Johnson. (2005). Biomass Yield, Phenology, and Survival of Diverse Switchgrass Cultivars and Experimental Strains in Western North Dakota. Agronomy Journal 97:549-555.

 

IMPLAN Professional for Windows 95/98/NT Version 2.0.1025.

 

National Agricultural Statistics Service 2002, Table 11. http://www.nass.usda.gov/census/census02/volume1/nd/index2.htm

 

North Dakota Farm Business Management State Report 2006.

 

North Dakota State University, Central Grasslands Research Extension Center 2006 Grass and Beef Research Review. http://www.ag.ndsu.nodak.edu/streeter/


NDSU Central Grasslands Research Extension Center
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