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ARS Home » Plains Area » Fort Collins, Colorado » Center for Agricultural Resources Research » Rangeland Resources & Systems Research » Research » Publications at this Location » Publication #338471

Research Project: Improved Management to Balance Production and Conservation in Great Plains Rangelands

Location: Rangeland Resources & Systems Research

Title: Flexible stocking as a strategy for enhancing ranch profitability in the face of a changing and variable climate

Author
item Ritten, John - University Of Wyoming
item Bastian, Chris - University Of Wyoming
item Derner, Justin
item Tanaka, John - University Of Wyoming

Submitted to: Meeting Abstract
Publication Type: Abstract Only
Publication Acceptance Date: 3/17/2017
Publication Date: 7/10/2017
Citation: Ritten, J., Bastian, C., Derner, J.D., Tanaka, J. 2017. Flexible stocking as a strategy for enhancing ranch profitability in the face of a changing and variable climate. Meeting Abstract. Presented Western Agricultural Economics Asso mtng, Lake Tahoe, CA..

Interpretive Summary:

Technical Abstract: Predicted climate change impacts include increased weather variability and increased occurrences of extreme events such as drought. Such climate changes potentially affect cattle performance as well as pasture and range productivity. These climate induced risks are often coupled with variable market prices which can have a large impact on ranch profitability. The major objectives of this research are to: 1) analyze how ranch profits are impacted over time in response to both variable precipitation-based influences on annual forage and animal productivity coupled with variable prices, and 2) analyze the impact of adding retained yearlings to the traditional cow-calf ranch as a strategy to mitigate the economic consequences of variability in both precipitation and prices. Cattle performance data quantifying the physical effects of climate variables has been obtained from long-term research at the United States Department of Agriculture (USDA)-Agricultural Research Service (ARS), High Plains Grasslands Research Station (HPGRS) near Cheyenne, WY. These data are used to estimate cattle production performance relationships that are incorporated into a Multi-period Linear Programming (MLP) model. We use this model to analyze a suite of precipitation scenarios coupled with price variability. Our precipitation scenarios include: 1) average historical precipitation over a 35 year period (i.e., no variability in precipitation and related forage production); 2) observed historical precipitation over that same 35 year period; and, 3) a precipitation scenario in which the standard deviation of historical precipitation is increased by 25% but the mean remains the same. These precipitation scenarios are analyzed over a suite of price simulations drawn from actual price data. We analyze the impacts of precipitation variability on both herd size and animal performance coupled with variable prices and report the resulting profitability for a traditional cow-calf ranch in southeastern Wyoming (Hamilton et al. 2016). We then compare those results to a cow-calf-yearling ranch with the same forage resources facing the same precipitation and price scenarios. Analyses of the ARS data indicate hyperbolic relationships between growing season precipitation (April+May+June) and both forage production (lbs/acre) and growing season precipitation and calf gains (lbs/head, assumed to be mainly dependent on changes in forage quality across years). These production relationships are used to model forage production and animal responses in the MLP model across the precipitation and price scenarios analyzed. Model results reveal that profitability for the ranch is reduced by 81% over a 35-year horizon when moving from a scenario of average precipitation to historical precipitation. Cow-calf profitability decreases by an additional 20% with increased precipitation variability (i.e., standard deviation increased by 25%). However, if steer calves are retained to provide stocking flexibility for the operation, long-term profitability is improved by over 23% in the historical precipitation scenario. The cow-calf-yearling model shows an increase of 35% compared to cow/calf only operations under the scenario of increased precipitation variability. Climate predictions for the region suggest the potential for increased precipitation variability including increased frequency and severity of drought events. Our results indicate that adding stocking flexibility by retaining steers greatly improves profitability and likelihood of ranch survival when compared to a traditional cow-calf operation under such conditions.