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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 #344399
Title: Ranch profitability given increased precipitation variability and flexible stocking

Author
item BASTIAN, CHRISTOPHER - University Of Wyoming
item RITTEN, JOHN - University Of Wyoming
item Derner, Justin

Submitted to: Journal of American Society of Farm Managers and Rural Appraisers
Publication Type: Peer Reviewed Journal
Publication Acceptance Date: 1/24/2018
Publication Date: 4/18/2018
Citation: Bastian, C.T., Ritten, J.P., Derner, J.D. 2018. Ranch profitability given increased precipitation variability and flexible stocking. Journal of American Society of Farm Managers and Rural Appraisers. 122-139.

Interpretive Summary: Cow-calf ranchers in the western Great Plains could potentially reduce enterprise risk and increase profitability by adding a yearling (stocker) operation to the ranch. We utilized existing science-informed relationships between forage production and spring precipitation, as well as cattle gains and spring precipitation, in combination with cattle market price variability to run a ranch-level model using historical (35 year) data for spring precipitation as a baseline and two scenarios: same average spring precipitation values as historical but 25% or 50% increase in standard deviation. Our analysis of adding a yearling enterprise to a cow-calf only ranch operation indicates that profitability can be improved by nearly 35% with increased levels of spring precipitation variability. Adding yearlings enables more effective matching of forage availability to animal demand which provides opportunities to utilize “extra” forage produced in above-average years while minimizing overutilization in below-average years. It is important to note that although profitability over the long-term is markedly enhanced with adding yearlings to a cow-calf operation, risk to the rancher is not reduced as profit variability among years remains similar. In addition to greater profitability potential over the long-term, adding yearlings to a cow-calf only operation results in the base cow herd being smaller, but more stable with time thereby enhancing long-term sustainability of individual herd genetics.

Technical Abstract: Forage and cattle performance relationships with spring precipitation, combined with cattle market price variability, were incorporated into a ranch level model to determine if addition of a yearling enterprise to the base cow-calf herd would improve profitability with increasing (25% and 50% greater) variability in spring precipitation. Our analyses suggest that profitiability can be improved by nearly 35% through additional of a yearling enterprise to a base cow-calf here, at the two levels of increased variability in spring precipitation. This adaptive livestock management strategy can be implemented by producers to stabilize cow numbers across years, thus enhancing long-term sustainability of herd genetics at the ranch level.