Musings and Math on Crops, Pastures, and Cattle
Just thinking…what if crop farmers started making hay and feeding cattle?
In March of this year, ISU Extension summarized the 10-year average yields for corn and soybeans by county and area in Iowa. Overall, the state average yield is 168 bu/ac of corn and 48 bu/ac of soybeans. The average sale price during that same period is $3.72/bu of corn and $9.06/bu of soybeans.
Say an average farm has 100 acres in a corn-soy rotation. Over the past 10 years, then…
- Corn sales: 100 ac x 168 bu/ac x $3.72/bu x 5 years = $312,480
- Soybean sales: 100 ac x 48 bu/ac x $9.06/bu x 5 years = $217,440
- Total sales: $529,920
With the high cash crop prices the past few years, more and more acres have been converted to corn and soybean production. But in the interest of conservation and diversity, some farmers are wondering about returning some land to third- and fourth-crop rotations or to perennial pasture.
Does that make economic sense? What would need to happen to make that so?
Let’s say that farmer decides to convert to grassfed livestock production. The average national (state not available) hay yield was 2.40 tons/ac and was sold for an average price of $122.46/ton. Average live choice steer price $93.98/cwt.
For the purposes of this exercise, I’ll assume that a finished steer weighs 1200 lb at slaughter. Grassfed and grass-finished cattle are often smaller-framed, but can be sold for a premium. I’ll arbitrarily assume a 1000-lb steer at slaughter and a premium of 20%, or $112.77/cwt. I’ll also assume that pasture production is roughly equivalent to hay production in terms of tons/ac of dry matter.
Using BRANDS, I made a number of estimates on intake and growth, and came up with a calf (weaned at 400 lb) requiring about 24 months to grow to 1000 lb, in the meanwhile consuming 6.4 tons of hay.
So on that average farm…
- Hay yield: 100 ac x 2.4 tons/ac x 10 years = 2400 tons
If the farmer sells the hay:
- Hay sales: 2400 tons x $122.46 = $293,904
If the farmer uses that it to feed out steers:
- Steers fed: 2400 tons / 6.4 tons/steer = 375 steers
- Steer sales: 375 steers x 1000 lb/steer x $1.1277/lb = $422,888
Now let’s look at the differences.
- Corn/soy versus hay: $529,920 – $293,904 = $236,016 more from corn/soy
- Corn/soy versus steers: $529,920 – $422,888 = $107,032 more from corn/soy
While $107,000 is a lot, recall that this is the difference over 10 years of production – not one. It’s $10,700 per year difference between the corn/soy and steers; $107/ac each year. And obviously these estimates don’t include any of the other costs of production – machinery and equipment, labor, feeder cattle purchase or cowherd maintenance, death loss, etc. But it is worth noting that the difference is not as great as casual chatter and common opinion may have us believe.
And the untapped question…what is the benefit of the topsoil and soil carbon preserved (or even added) to that pasture/hay regime?
Resources
BRANDS – went from 400-1000 lb, “yearling” at 600 lb, fed mixed grass hay
http://www.extension.iastate.edu/agdm/crops/pdf/a1-20.pdf
http://quickstats.nass.usda.gov/results/B5A37888-01BF-302A-A04D-81FDFDA83BCC?pivot=short_desc