Weather key to economic certainty of livestock management strategies

Weather key to economic certainty of livestock management strategies

Posted: Tuesday, September 28, 2010 8:01 pm

Rangeland Ecology & Management – The only things certain in life are death and taxes, the saying goes. The corollary could be that the only things ranchers can depend on to be uncertain are weather and prices. These uncertainties are the major risks for rangeland livestock producers in maintaining a profitable operation. Climate variations can bring about fluctuations in forage production that impact grazing and herd sustainability.
 
An article in the June issue of Rangeland Ecology & Management examines the economic potential of livestock management strategies. The authors contrast conservative and flexible stocking to determine which strategy offers the most consistent long-term economic gain. The setting for this study was a shortgrass prairie rangeland using production and economic characteristics of New Mexico State University’s Corona Range and Livestock Research Center.
 
When drought conditions occur, ranchers take measures such as reducing livestock numbers, leasing additional grazing land, temporarily overgrazing rangelands, and increasing supplemental feeding. More anticipatory actions include maintaining a conservative stocking rate, stocking more yearlings for grazing flexibility, and ensuring that a significant amount of herbaceous forage remains at the end of the grazing season.
 
A conservative stocking strategy is slow and steady. This strategy underutilizes the forage resource, but destocking is rarely necessary. Unfortunately, the benefits this strategy brings during drought periods can also result in missed opportunities in wetter years .
 
A flexible strategy builds stock levels during favorable years and quickly destocks in dry periods. Economic models show that this strategy can net almost double the return of a conservative strategy. However, production costs are higher and more risk is incurred. Weather and livestock prices are more significant variables for the ranch profit margin.
 
The authors conclude that the flexible grazing plan offers the greatest potential for ranch profitability. They also note that a flexible plan is more suitable in northern climates where spring stocking decisions have the benefit of tying into spring precipitation patterns, which can determine forage production for the entire year. In other words, the better the weather, the more certain the profit.
 
Full text of the article, “Economics of Flexible Versus Conservative Stocking Strategies to Manage Climate Variability Risk,” Rangeland Ecology & Management, Volume 63, Issue 4, July 2010, is available at http://www2.allenpress.com/pdf/rama-63-04-415-425.pdf.

Posted 9.28.10

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