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


Conclusions

Table 6 summarizes the net return to each management system or enterprise. This is the amount of profit or loss after the value of the land is deducted. Also listed is a return to land and management for producers who do not want to consider renting their land. The cost of labor on the cropping and haying systems was not deducted because it could not be separated from the custom work rate; therefore, this cost was not subtracted from the livestock returns either. As already observed, returns from all systems are as dependent upon weather and current prices as they are on good farm/ranch management.

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

  Average
1992-97
1998 1999 8-Year
Average

Net Return to System

Cash Crop

-$20.70

-$7.42 -$55.23 -$23.86
Grazing $8.19 -$8.23 $26.77 $8.46
Haying $3.33 $8.32 $7.33 $4.45

Return to Land and Management

Cash Crop $6.23 $19.53 -$27.88 $3.63
Grazing $40.84 $18.72 $54.12 $39.74
Haying $30.26 $35.27 $34.68 $31.44

Cost figures shown in tables 1, 3, and 5 for custom work, land rental and cow maintenance are from Ag Statistics, Ag Extension publications, or are best estimates. In any given operation, the poorest cropland was enrolled in the CRP. When making decisions for future use of these acres, it is important to remember that this land will always be marginal in quality; therefore, each producer should substitute his costs of operation to arrive at his potential net profit or loss. Government payments should not be included in this estimate.

Should you cash rent your land? On land valued at $300/acre, cash rent of $27.35 per acre is a 9.1% return on investment. This would indicate that land rental rates are too high in relationship to the land's ability to return a profit. Consideration should be given to additional uses such as wildlife easements or fee hunting. This research shows the long term productivity and economic potential of grazing and haying marginal, highly erodible land, whether it is enrolled in CRP or not.


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