An Economic Analysis of Grazing, Haying and Cropping Marginal Highly Erodible Crop Land in Southcentral North Dakota

Paul E. Nyren, Bob D. Patton, and Brian S. Kreft, NDSU Central Grasslands Research Extension Center and David Lambert, NDSU Agricultural Economics

Table of Contents

Highlights

Procedure

Crop Farming on Marginal Land

Grazing Marginal Highly Erodible Land

Haying Marginal Highly Erodible Land

Conclusions

Highlights

Eleven-year average returns to land, labor and management for the three enterprises show a return to the cash crop of $0.19/acre, the grazing of reseeded marginal land $52.17/acre and haying $29.49/acre.

The goal of this study is to record actual input costs for cropping, grazing and haying marginal lands. These costs are, whenever possible, calculated from actual costs, such as the cost of fertilizer, herbicides, etc. In other instances where actual costs are not available, estimates are used that closely reflect actual input costs. For equipment and operator costs for cropping and haying, custom farm rates are used, as they are a fair reflection of the costs involved in depreciation, repairs and operator’s time. Costs for land taxes and government disaster payments are not included in the calculations.

Procedure

The study site is classified as marginal highly erodible land (HEL) by the Natural Resources Conservation Service. The grazing portion of this study was seeded in 1985 to a mixture of tall wheatgrass, intermediate wheatgrass, sweetclover and alfalfa. In 1992 the land was subdivided into a 135-acre season long treatment and a 235-acre twice-over rotation grazing treatment. In 1998, the twice-over rotation system was changed to a three-pasture rotation system where the pastures were grazed once rather than twice. Ninety acres of CRP land adjacent to the grazing systems are cut for hay each year. These acres were also seeded in 1985 to the same species used in the grazing study. Exclosures are set up on silty sites and are neither grazed nor hayed. These unused areas serve as a control treatment to which the grazed and hayed treatments are compared.

Crop Farming on Marginal Land

The annual crop is grown on 80 acres on section 22 of the Central Grasslands Research Extension Center. This area is also classified highly erodible marginal cropland due to its rough topography and sandy, gravely soils Oats were planted in the spring of 2002. Due to the dry conditions the oats was cut for hay in July. Table 1 shows the costs for raising and harvesting the oat hay and the eleven-year average costs for the small grain/annual forage crops. The largest cost over the eleven-year period is the land cost. This figure comes from data compiled by the NDSU Extension Service. Throughout this article these costs will be used. Since this study is conducted on the eastern edge of Kidder County and the western edge of Stutsman County, the two counties’ rental rates are averaged for both cropland and pastureland. The next most costly item is seeding which includes anhydrous and dry fertilizer application. Total production costs for the oat hay were $73.17 in 2002. Eleven-year average per acre costs for raising the small grain crop totaled $88.62 (table 1). Table 2 shows the returns for the annual cropping enterprise. In 2002, oats hay yielded 0.53 tons/acre and the value on the date of harvest was $60.00/ton. resulting in a gross return per acre of $31.80. When the cost of production is subtracted the oats lost $41.37/acre.

Grazing Marginal Highly Erodible Land

The study started the year with 148 cow-calf pairs but due to the dry conditions 31 pairs were sold in May to bring the herd size down to 117 pairs. These 117 cow-calf pairs grazed 370 acres of reseeded marginal land in 2002. While precipitation was below normal during April, May and June, precipitation for the month of July was better and the forage responded accordingly. Average forage production for the eleven-year period totaled 2,660 lb/acre on the season long pasture and 3,148 lb/ac for the rotation system. For the past five years these pastures have been grazed in a complementary system with native range on the Research Center. When the grazing season was shortened to accommodate the new grazing system the number of cow-calf pairs was increased to maintain a similar stocking rate. For the purpose of this analysis, costs for the native pastures are included in the land costs and are calculated on the basis of 1.3 acres/animal unit month (AUM) grazing at a rental rate of $11.60/acre.

Again in 2002, winter feed and land were the two highest costs for maintaining the cow herd. Feed costs per cow in 2002 totaled $157.68 compared to $78.84 per cow in 2001. For most estimated costs a 3% increase was applied to last year to cover inflation. The exception was fuel and electricity, which were increased 6% from 2001. Total per head costs for the year were $440.09, (table 3) which included the cost of maintaining the bulls and replacement heifers. This was a considerable cost increase from 2001 due primarily to the increased cost of winter feed.The calves were weaned on October 22 with the steer calves averaging 626 lbs/head and heifer calves averaging 564 lbs/head (table 4). The value was calculated based on local livestock sales with 600 to 650 lb steers bringing around.$0.88/lb and 500 to 550 lb heifers bringing$0.83/lb. The cows weighed 1430 at weaning and cull cows brought $0.35/lb at that time. The last line in table 4 indicates the returns to the livestock grazing system. The $102.09/acre reflects the net return to the system.

Haying Marginal Highly Erodible Land

The yields on the 90 acres that were hayed decreased considerably from 2001. Table 5 shows the averages of the 11 years of the study. If the yields of 1992 are not considered (the first year when much of the yield was the result of past years’ production) then the 10-year average yield is 1.6 tons/acre. The yield for 2002 was only 36% of the 11-year average. In 2002 the hay was valued at $60/ton, up $30 from 2001. Results of this study show that the haying enterprise returned -$4.90 per acre in 2002 down $7.21 from the eleven-year average.

Conclusions

Tables 1 and 5 have included a line for land costs. The cost used for land includes the average values for rented land as compiled by the NDSU Extension Service and was derived by averaging the land rental values for Kidder and Stutsman counties as the study site is located in both. Where possible labor costs were estimated for all activities except the custom rates where the labor is part of the overall charge and could not be extracted. These charges constitute the cost for land, labor and management and are often not subtracted from the returns for ranch operations.

Table 6 summarizes the returns to each of the enterprises on the study. The second half of this table shows the returns without deducting the cost of land and labor and is usually referred to as return to land, labor and management. This figure more closely reflects what most producers would consider their “bottom line”. Grazing is clearly the most profitable enterprise on this type of land. There are 13 million acres of rangeland in the state of North Dakota. Long term research evaluating grazing systems shows that 1.5 to 2.0 acres of good to excellent condition rangeland in North Dakota are needed to adequately maintain a cow and her calf for one month (AUM). Thirteen million acres of rangeland equates to approximately 6.5 million AUMs of grazing in the state per year. At an average conservative cost of $207.00 per AUM, this translates to approximately $1.35 billion that is spent annually in communities and businesses throughout the state.