Economic performance of various summer pasture and winter feeding

Economic performance of various summer pasture and winter feeding

FORAGE TECHNICAL BULLETIN #2013-01 Economic performance of various summer pasture and winter feeding strategies for cow-calf production Introduction...

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Economic performance of various summer pasture and winter feeding strategies for cow-calf production Introduction Cow-calf producers in Western Canada are confronted with high production costs that are impeding their competitiveness. Like most livestock production systems, feed costs are the major production costs in cow-calf operations. In particular, feeding and management through the winter may account for up to two-thirds of the total cost of primary beef production in Canada (Kaliel and Kotowich, 2002). According to a survey conducted in Manitoba, hay was the predominant winter forage for the majority of beef producers, followed by straw and silage (Small and McCaughey 1999). There are alternative strategies that offer opportunities to reduce production cost in cowcalf operations. These strategies may involve increasing the number of days cows graze and decreasing the amount of harvested and purchased feed fed per cow (D’Souza et al., 1990; McCartney et al., 2004). The extension of the grazing season can be achieved through the improvement of pasture production, stockpiling forage for late fall and winter grazing and swath grazing. In Manitoba, extended grazing strategies have provided up to 4 months of grazing in addition to the 3 to 5 months achieved with summer pastures (Small and McCaughey, 1999). However, very little published work is available on the economic benefits of incorporating alfalfa into pasture mixtures for cow-calf production, particularly when integrated with alternative winterfeeding systems (Khakbazan et al., 2009). The objective of the current study is to evaluate the effects of different summer pasture and winter feeding strategies on production costs. The alternative cow-calf production systems are compared side-by-side, and the main factors impacting their cost of production are identified.

Animal management The study was conducted at the Agriculture and Agri-Food Canada Research Centre in Brandon, Manitoba (Legesse et al., 2012). Diet composition and animal data were collected over five production years (1998-2003) with British-Continental crossbred cows assigned to each strategy for the duration of the trial. Each production year began in June with 288 cow-calf pairs (including 76 first-calf 2-y old cows) assigned to graze either alfalfa-grass or grass pastures until weaning. Grazing ended when available forage and regrowth potential could no longer support continued grazing pressure. In autumn after weaning, one half of the 240 pregnant cows were assigned to 1

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extended-grazing of stockpiled pasture and swathed annual crops, and the other half were assigned to one of three diets fed in drylot: hay, straw/barley1, and silage/straw2. The annual crops used for extended grazing were oats, Golden German foxtail millet, corn and spring triticale. Cows were fed common diets between weaning and winter feeding system, and between precalving and summer grazing.

Economic analysis Previous analysis showed that body weight and reproductive parameters were for the most part similar between the two summer pastures and among winter feeding strategies (Legesse et al., 2012). The returns from the strategies in a given feeding period were therefore assumed similar. The economic analysis in this study focuses on comparing and ranking feeding strategies with regard to production costs using partial budgeting. Emphasis is especially given to costs that differed among feeding strategies in a given feeding period. Partial budgeting is a tool that can be used to assess the effects of a change from an existing system (Doye, 2008). It only considers cost and revenue items that will change with an alternative strategy. In the present study, first, aspects of the feeding strategies that were affected by the change were identified. After determining the types of impacts that occurred, cost increases or decreases as a result of the change were quantified. Costs associated with each feeding system were compiled based mostly on the resources used during the study period. Feed and agronomic data from the experiment, combined with economic data on machinery and input costs were used to develop the partial budgets. The production costs considered included seed, fertilizer, chemical, fuel and oil, repairs, machinery and labour. Other costs such as veterinary and medicine, salt and mineral, breeding, taxes and water are assumed the same for all groups of animals in a given period. In total, inputs and costs of 30 machinery/equipment items reported in different systems were estimated. To estimate machinery/equipment operating rates, fuel use and costs associated with them, the latest Farm Machinery Custom and Rental Rate Guide prepared by MAFRI (2012) was consulted. When the equipment/machinery was not found in the MAFRI Guide, earlier prices were taken from Saskatchewan Ministry of Agriculture (2010), and adjusted for inflation over the year difference based on the Bank of Canada Inflation Calculator. The book values were verified by

1 2

(70% oat straw:30% steam-rolled barley grain, dry matter (DM) basis) (40% barley silage:60% oat straw, DM basis)

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farm personnel and adjustments were made if necessary. Table 1 shows selected inputs used and assumptions made for the economic analysis. Table 1. Some of the assumptions and inputs used to estimate production costs. Assumptions/inputs Provincial averages *

Hay yield * Barley yield Barley silage

A grain to straw yield (for barley and oats) A grain to straw price (for barley and oats)# Dry matter Barley Grain Barley Silage Oat Straw

Unit

Value

Remark

ton/acre ton/acre ton/acre

1.69 1.44 6

Wet Wet Wet

ratio ratio

1:1 4:1

percent percent percent

87 38 88

percent percent percent

1 15 15

$/bushel $/bushel

4.14 2.78

lb/cow/day lb/cow/day

9.4 14.2

lb/cow/day lb/cow/day lb/cow/day

7.4 17.2 28.6

Source: own data Source: own data Source: own data

Postharvest and feeding loss Barley grain Barley Silage Oat Straw

Farm gate price Barley Oat

Dry matter intake Barley silage/Oat straw Barley silage (40%) Oat straw (60%) Barley grain/Oat straw Barley grain (30%) Oat straw (70%) Hay

Fertilizer price N (as N) $/lb 0.53 P (as P2O5) $/lb 0.58 K (as K2O) $/lb 0.45 S (as S) $/lb 0.30 * Based on ten-year provincial production averages. # Hence, 80% and 20% of the inputs and costs from the respective crop production were assigned for the grain and the straw, respectively.  The dry matter intakes were calculated using appropriate models based on the actual chemical composition of the feedstuffs.

The variable cost for each piece of equipment employed during the study period was multiplied by the number of hours of actual use time as recorded for each feeding system. The cost for both gasoline and diesel fuel was calculated by using the average amount of fuel per piece of equipment used per hour multiplied by the average yearly retail price of the fuel in Winnipeg as reported by Statistics Canada (2011). A labour rate of $15.00 per hour was used and multiplied by the number of actual hours recorded for each feeding system. Price related variables included in partial budgets were estimated based on market values in 2012 to accommodate price 3

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changes since the actual experiment had been carried out. For cost analysis, body weight variations in different production years and feeding systems were standardized in Animal Units. Establishment costs of the pastures and annual crops for hay, stockpiled forages and swath grazing were determined from the records of the whole-field inputs costs for tillage, fertilizer, fertilizer application, seed, seeding, pesticide, spraying, swathing and baling. Pasture/hay establishment costs were amortized over 7 years with coefficient of 0.1728 (assumed interest rate 5%). Input estimates (e.g., establishment) for stockpiled forages were generally made based on the information obtained for hay in the present study. During the actual study period, oat straw was purchased from external sources. Inputs and costs associated with oat straw were estimated for the present analysis as if the straw was produced on the farm (mainly based on the information gathered for barley).

Results and Discussion The calculated costs per Animal Unit Day for each winter feeding strategy and net changes in income are shown in Table 2. During the winter feeding period, cows managed under extended grazing management showed the highest positive net change in income (reduced costs minus additional costs; $1.1/Animal Unit Day) compared with the control group (i.e., hay). Table 2. Partial budget (cost) analysis for beef cows managed under various winter feeding strategies. Control Alternative winter feeding systems Oat strawOat strawExtended Hay* barley silage barley grain grazing Costs $/Animal Unit Day Equipment/Machinery 1.03 1.11 0.96 0.28 Labour 0.19 0.25 0.21 0.06 Fertilizers 0.79 0.47 0.51 0.36 Seed 0.019 0.019 0.020 0.16 Herbicides 0.01 0.03 0.03 0.12 Total cost 2.04 1.88 1.73 0.98 Net change in income compared to hay 0.16 0.31 1.06 *For the winter systems, hay has been considered as a control.

Straw-silage and straw-grain systems also achieved $0.16 and $0.31 lower costs per Animal Unit Day, respectively, compared with the control group. The major portion of the savings for the grazing group was due to a significant reduction in the utilization of machinery/ equipment and associated labour. The magnitude of the costs, however, differed among the production years (Figure 1). For example, the production cost of cows in the extended grazing group was lower than those in the oat straw/ barley grain group in the first four years but comparable in the last 4

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year (2002). The fifth production year (2002) was influenced by the first of three consecutive years of drought and had the second shortest grazing period. Subsequently in 2003 crop failure eliminated annual crop extended grazing options. In the last two production years, the fertilizer and herbicide costs per Animal Unit of the grazing systems were also the highest. On the other hand, there was no fertilizer application in 1998 and 1999 for stockpiled forages nor in 1998 for Production cost ($/Animal Unit) in actual feeding period

swathed annual crops. $300

Total cost ($/ Animal Unit)

$250

$200

$150

$100 Hay Oat straw/ Barley silage

$50

Oat straw/ Barley grain Extended grazing

$0 1998 (65 days)

1999 2000 2001 (128 days) (86 days) (108 days) YEAR (Feeding Period)

2002 (82 days)

Figure 1. Production costs of cows ($/Animal Unit) for the actual winter feeding period. Animal Unit Day is a standard measure for 1000 lb cow for a day. Cows during this feeding period were dry and pregnant. The longest period of extended grazing (128 days) was recorded in 1999. Simplified calculations were made to quantify production costs for 128 days for all the years assuming that cows in the extended grazing group were provided hay when the grazing period ended (Figure 2). Cows in the drylot groups were assumed to stay in their respective system.

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Production costBULLETIN per Animal Unit if the grazing period was extended to the FORAGE TECHNICAL

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Total cost ($/ Animal Unit for a period of 128 days)

maximum observed $300

$250

$200

$150

$100 Hay Oat straw/ Barley silage

$50

Oat straw/ Barley grain Extended grazing

$0 1998

1999

2000 YEAR

2001

2002

Figure 2. Cost of managing a cow ($/Animal Unit) through a winter feeding period of 128 days. While the discrepancy in production costs was more evident in the extended grazing system, the overall rankings of theNet costs were not changed. The lowest cost was estimated for cows in the change in cost compared to hay ($/Animal

Net change in income ($/Animal Unit Day)

Unitgrazing Day) period in that year. extended grazing group in 1999 owing to longer 1.50

Oat straw/ Barley silage Oat straw/ Barley grain Extended grazing

1.00

0.50

0.00

-0.50

-1.00

Hay with current Hay with 50% lower fertilizer rate (Cost) fertilizer cost Scenarios

Hay without fertilizer

Figure 3. Net change in income ($/Animal Unit Day) from alternative winter feeding strategies against hay at different fertilizer pricing scenarios: (i) current fertilizer rate and cost, (ii) 50% lower fertilizer cost and (iii) without any chemical fertilizer application.

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Shorter winter grazing periods tended to incur relatively higher costs as a result of high machinery and fertilizer overheads. The economic benefit of other drylot systems compared to hay relies on the relative market prices of feedstuffs, the requirement and price of inputs (e.g., fertilizer) as well as prices and efficiency of the machinery. Two hypothetical scenarios of hay production with regard to fertilizer costs were compared against the base scenario (i.e., control). The scenarios were: lowering the fertilizer-related costs by half (by halving the application rate and associated costs) and producing hay with negligible fertilizer-related costs (Figure 3). Both scenarios eliminated the benefit of oat straw/barley silage and oat straw/barley grain systems over hay. Nonetheless, the extended grazing system maintained its relative economic advantage in these scenarios indicating managing cows in grazing alternatives for as long as possible is one of the viable options for cost saving in cow-calf operations. For the summer pastures, the difference in costs was essentially fertilizer-related (Figure 3). To achieve the same or similar yields, grass pastures required more fertilizers and thereby higher costs associated with the purchase and application (i.e., machinery and labor) of fertilizers. 0.60

0.50 Cost ($/Animal Unit Day)

Grass

Alfalfa-grass

0.40

0.30

0.20

0.10

0.00 Equipment/Machinery

Labor Input category

Fertilizers

Figure 4. Average daily cost ($/Animal Unit Day) during summer grazing period for the major cost items. Animal Unit Day is a standard measure for 1000 lb cow for a day. Cows during this feeding period were with their calves. Our results show the economic advantage of extended grazing is highly dependent on precipitation especially in the spring, and these factors are subject to considerable year-to-year variation. Total precipitation over the spring period (between February and May) in 1998, 1999, 7

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2000, 2001 and 2002 were 125 mm, 243.5 mm, 106.2 mm, 105.4 mm and 46.6 mm, respectively. Cost savings through grazing were most apparent in the early production years where precipitation was abundant and no or limited fertilizer application occurred. Reducing chemical fertilizer application through appropriate alfalfa-grass mixtures as well as taking into account machinery characteristics such as fuel efficiency, work rate and useful life can also further help lower winter feeding costs particularly in grazing/hay systems. Acknowledgement: We gratefully acknowledge the financial support of Manitoba Agriculture, Food and Rural Initiatives (Agri-Extension Innovation Program), and Agriculture and Agri-Food Canada. Researchers: Getahun Legesse1, Mohammad Khakbazan2, Gary Crow1, Julie Small2, Shannon Scott2, Hushton Block2, Clayton Robins2, Ermias Kebreab1 and Paul McCaughey2 Affiliation:

1

University of Manitoba, Winnipeg, Canada

2

Agriculture and Agri-Food Canada, Brandon Research Centre

References D’Souza G. E., Marshall E. W., Bryan W. B. and Prigge E. C. 1990. Economics of extended grazing systems. American Journal of Alternative Agriculture. 5: 120–125. Doye D. 2008. Budgets:their use in farm management. Oklahoma Cooperative Extension, Factsheet AGEC-139. http://osufacts.okstate.edu/docushare/dsweb/Get/Document1682/AGEC-139web.pdf (Last accessed November 29, 2012) Kaliel D. and Kotowich J., 2002. Economic evaluation of cow wintering systems – Provincial swath grazing survey analysis. Alberta Production Economics Branch, Alberta Agriculture Food and Rural Development, Edmonton. Kaliel D., 2004. Economic, productivity and financial benchmarks for Alberta cow/calf operations (http://www1.agric.gov.ab.ca/$department/deptdocs.nsf/all/econ8479). Khakbazan M., Scott S. L., Block H. C., Robins C. D., and McCaughey W. P., 2009. Economic effects and energy use efficiency of incorporating alfalfa and fertilizer into grass-based pasture systems. World Academy of Science, Engineering and Technology. 49: 79-84. Legesse G., Small J. A., Scott S. L., Kebreab E., Crow G. H., Block H. C., Robins C. D., Khakbazan M. and McCaughey P., 2012. Bioperformance evaluation of various summer pasture and winter feeding strategies for cow-calf production. Canadian Journal of Animal Science 92: 89-102. MAFRI. 2012. Farm Machinery Custom and Rental Rate Guide. Manitoba Agriculture, Food and Rural Initiatives (MAFRI). Winnipeg Manitoba.

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McCartney D., Basarab J. A., Okine E. K., Baron V. S. and Depalme A. J., 2004. Alternative fall and winter feeding systems for spring calving beef cows. Canadian Journal of Animal Science. 84: 511–522. Saskatchewan Ministry of Agriculture. 2010. 2010-11 Farm Machinery Custom and Rental Rate Guide. Saskatchewan, Canada. Small J. A. and McCaughey W. P. 1999. Beef cattle management in Manitoba. Canadian Journal of Animal Science. 79: 539-544.

This publication is a series of two published in March of 2013. For more information contact: Dr. Gary Crow, University of Manitoba, Department of Animal Science, Winnipeg, MB, Canada - R3T 2N2. Ph: (204) 474-9102 E: [email protected]

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