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


Grazing CRP Land

Three-hundred-seventy acres of privately owned CRP land located 4 miles southeast of the Center are used for grazing. This land was seeded in 1985 to a mixture of tall wheatgrass, intermediate wheatgrass, sweetclover and alfalfa. In 1997, the original CRP project at CGREC was completed. The CRP task force which was set up to administer the original project decided that the cool season grasses seeded on most CRP contract lands were more suited to a complementary type of grazing system. A new CRP grazing project was developed which would use the original CRP grazing systems as the early season pastures in a complementary grazing system. The CRP grazing season was shortened by 50% and the number of animals increased from 87 to 135 to maintain a similar stocking rate to previous years. By shortening the grazing season, the cool season grasses on the CRP site are rested during late July and August. When the animals were removed from the CRP acreages in mid-July, they were placed on native mixed-grass prairie for the remainder of the grazing season.

For the purpose of this study, the livestock and CRP land enterprises are combined. Economic principles would suggest that each be separated, but because we are evaluating a system of grazing CRP land we have combined them into one enterprise. The land rental value would be $11.10 or $27.35 per acre depending on whether the land was pastured or cropped in 1999. In calculating the costs associated with the grazing enterprise the cropland rental rate of $27.35 per acre was used, since this land was cropped prior to being enrolled in CRP and the alternative use would be to return it to cropland.

It was assumed that the herd of 87 bred females was purchased on January 1, 1992. An additional 48 head of bred heifers were purchased in 1998 increasing the herd to 135. In 1999, the herd consisted of 140 cow-calf pairs. Since there were no replacement females in the CRP herd in 1993, it was necessary to purchase 17 replacements. In 1994-1997, seventeen heifers saved from the 1992-1995 calf crops were bred and ready to calve and became the replacements. Twenty-seven heifers were kept for replacements in 1998 and 1999.

Table 3 is a listing of the costs associated with operating the livestock herd during the year. The cost of replacements is the cost of maintaining the replacement heifers from the time of weaning until they join the herd. This includes pasture costs during the summer and feed costs for the time they are kept separate from the main cow herd.

Table 3. Costs Per Cow and Per Acre
Year Average
1992-97
 1998 1999 8-Year
Average
Number of Acres 370 370 370 370
No. of Head 87 135 140 99
Fuel & Elec. $38.23 $40.21 $41.82 $38.93
Dep. bldg. & Equip. $14.85 $15.40 $15.86 $15.05
Feed $92.63 $99.36 $74.52 $91.21
Salt & Mineral $9.22 $9.96 $10.26 $9.44
Replacements $26.56 $12.44 $16.70 $23.57
Bulls $10.77 $11.04 $11.05 $10.84
Veterinary $5.47 $5.95 $6.13 $5.61
Marketing $4.00 $4.10 $4.22 $4.04
Labor $16.84 $16.90 $20.99 $17.37
Land Costs $114.54 $118.03 $118.73 $115.50
Death Loss $9.10 $7.81 $8.26 $8.83
Total Cost/Cow $342.22 $341.20 $328.55 $340.38
Total Costs/Acre $80.47 $124.49 $119.88 $90.90
Total Herd Costs $29,772.72 $46,062.26 $44,354.06 $33,631.58

Table 4 shows the average value of animals sold for the period between 1992-1997, and the values for 1998 and 1999. In 1999, it was assumed 27 heifer calves were retained as replacements and 17 cows sold as culls. The value of the animals was calculated at the time of weaning based on sales at several local livestock markets. Each year an opportunity cost was deducted from the returns from livestock sales. This is the amount of interest that could have been earned if the livestock had been sold and the money invested in a 12-month certificate of deposit at 4.5% interest. Returns for the eight-year study varied from a high of $26.77 per acre in 1999 to a low of -$15.77 per acre in 1996 with an eight-year average return of $8.46 per acre.

Table 4. Livestock Returns
 

Average
1992-97

 1998 1999 8-YR.
Average
No. of Acres 370 370 370 370
No. Heifers 25 39 46 29
Avg Wt. 514 535 513 516
Price/Lb. $0.75 $0.71 $0.84 $0.76
Return-Heifers* $8,997.85 $14,073.44 $18,831.20 $10,654.40
         
No. Steers 46 69 67 51
Avg. Wt. 557 560 567 559
Price/Lb. $0.80 $0.76 $0.90 $0.81
Return-Steers* $19,309.14 $27,898.08 $32,480.60 $22,029.19
         
No. Culls 17 17 17 17
Avg. Wt. 1316 1236 1298 1304
Price/Lb. $0.39 $0.29 $0.38 $0.38
Return Culls* $8,270.33 $5,788.81 $7,965.83 $7,922.08
Total Returns $36,577.33 $47,760.33 $59,277.63 $40,812.74
         
Opportunity Costs $3,775.07 $4,742.88 $5,019.96 $4,051.66
Total Herd Costs $29,772.72 $46,062.26 $44,354.06 $33,631.58
Total Cow Costs/A (table 3.) $80.47 $124.49 119.88 $90.90
Net Returns/A $8.19 -$8.23 $26.77 $8.46
* =Less 5% shrink

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