Economic Sustainability of Forage-Fed Beef Systems

Linda Benedict, Gillespie, Jeffrey M., Sitienei, Isaac, Scaglia, Guillermo, Wang, Jim Jian  |  11/13/2014 10:40:22 PM

A group of steers in the winter of 2011 in the System 3 forage system used in this study. Photo by Guillermo Scaglia

Table 1. Revenue, expenses and profit per treatment (dollars per animal). Note: Different superscripts within a row indicate the figures are statistically different.

Table 2. Climate change potential as kilograms of CO2 equivalent emissions per year.

Basu D. Bhandari, Jeffrey M. Gillespie, Guillermo Scaglia, Jim J. Wang and Isaac Sitienei

A wide range of pasture systems can be used to produce forage-fed beef. Each system results in different levels of productivity, profitability and sustainability outcomes. Forage-fed beef refers to beef from cattle whose lifetime diet consists of only grass and other forages, with the exception of milk consumed prior to weaning. No grain is fed.

Although forage-fed beef accounts for a small portion of the U.S. beef industry, it has been increasing over the past two decades. Current and potential forage-fed beef producers are looking for the most profitable production systems. Research was carried out at the LSU AgCenter’s Iberia Research Station from 2009 to 2012 to analyze the economics of three different pasture systems. These systems were chosen as representative of the systems being used in the U.S. Gulf Coast region.

System 1 consists of bermudagrass in summer and ryegrass in the winter. This is the most common and simplest system analyzed. System 2 consists of bermudagrass in the summer and ryegrass, rye, clover mix (white, red and berseem) in the winter. System 3 includes bermudagrass, a sorghum-sudan hybrid and forage soybean in the summer and ryegrass, rye and a clover mix in the winter. Each year, 54 fall-born steers at the age of 7-8 months were weaned. These steers were divided into nine groups (six steers per group) and randomly assigned to one of the three treatments, which were replicated three times. They remained on the same treatment until harvest at the age of 17-19 months. During periods when pasture was not available, animals were fed with hay made from the paddocks where they were assigned.

Detailed costs of inputs and outputs were recorded on a daily basis. The input costs were categorized into variable costs and fixed costs. Variable costs included costs of fertilizers, seed, pesticide, minerals, medication, twine, fuel, purchased weaned steers, repair and maintenance for machinery and equipment, and interest on operating capital. Fixed costs included depreciation and interest on machinery and equipment, and permanent and temporary fencing. The opportunity cost of land rental was also included. Prices of inputs were based on annual LSU AgCenter cost of production estimates. Output prices were based on U.S. Department of Agriculture sources.

Results on economic profitability are presented in Table 1. Results showed that Systems 1 and 2 were more profitable than System 3. The residual returns from Systems 1, 2 and 3 were $646, $578 and $353 per steer on per year bases, respectively. Steer income did not differ among systems, but hay income did. Total variable costs did not differ among these systems even though the fertilizer costs were higher in System 1 than in Systems 2 and 3. Seed costs were higher in System 3.

To analyze the environmental sustainability of the systems, carbon dioxide (CO2) equivalent emissions from each system were computed including that from the production of nitrogen fertilizer and pesticides; digestion; emissions of carbon dioxide, nitrous oxide and methane; and the diesel fuel used in fertilizer and pesticide application, tillage and hay operations. The carbon dioxide equivalent emissions from nitrogen production and digestion were based on published literature. All other sources were based on the data collected in this experiment.

From an environmental perspective, System 3 was the best since it produced the least CO2 equivalent emissions as shown in Table 2. System 3 produced 17,539 kilograms equivalent CO2 emissions per steer while Systems 1 and 2 produced 23,040 and 19,196 kilograms equivalent CO2 emissions per steer, respectively.

A trade-off can be made between economic profitability and environmental sustainability. If reduced carbon dioxide equivalent emissions were valued at $0.05 per kilogram, then Systems 1 and 3 would be economically equivalent. Similarly, if reduced carbon dioxide equivalent emissions were valued at $0.14 per kilogram, then Systems 2 and 3 would be economically equivalent. Therefore, when deciding which system to use for forage-fed beef production, both economic and environmental factors must be considered.

Basu D. Bhandari is a graduate research assistant and Jeffrey M. Gillespie is Martin D. Woodin Endowed Professor in the Department of Agricultural Economics and Agribusiness. Guillermo Scaglia is an associate professor at the Iberia Research Station, Jeanerette. Jim J. Wang is a professor in the School of Plant, Environmental and Soil Sciences. Isaac Sitienei is a graduate research assistant in the Department of Agricultural Economics and Agribusiness.

This article was published in the fall issue of Louisiana Agriculture.

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