Increasing Intensity of Pasture Use with Dairy Cattle: An Economic Analysis

Intensive grazing is a fast growing dairy production system in the USA, New Zealand, and Ireland. The key concept underlying intensive grazing systems is the substitution of cow-harvest for machinery harvest of forages. Study objectives were: (i) to determine whether randomly selected, representative dairy farms using intensive grazing were profitable, (ii) to determine whether grazing was more or less profitable than other crop enterprises, and (iii) to identify factors statistically associated with increasing intensity of grazing. Data were collected on 53 farms in a prominent dairy region of Pennsylvania in 1993. Results indicated that moderate intensive grazing achieved a $129/acre return to operator management and labor, compared with $20 and $58 returns for all hay and corn silage enterprises, respectively. Dairy enterprise returns averaged about $317/cow. Debt per cow was substantially higher for farmers increasing grazing intensity. Pasture acres per cow, high debt-to-assets, and negative cash flows were statistically associated with increasing intensity of pasture use. Thus, this study suggests that farm financial constraints of high debt and poor cash flows provide an important motivation to increase grazing intensity. A major drawback of intensive grazing is the likelihood of achieving slightly lower milk production than with confinement feeding. The primary economic benefit of intensive grazing was the reduction of costs associated with the production of pasture forage vs. production of other crops. Research QuestionThis research analyzes the economic performance of forage and dairy enterprises in the context of intensive grazing systems. It's primary focus is to determine whether intensive rotational grazing is profitable among randomly selected grazing dairy farms. Although grazing systems, with varying levels of intensity, are used by more than 30% of dairy farms in several states, the economic motivation for increased use of pasture forages has not been well-demonstrated, empirically. Attention is also given to the effects of debt and cash flow constraints on adoption of grazing systems and the relative impacts of grazing on crop enterprise vs. dairy enterprise profits. Literature SummaryIntensive grazing is characterized as a cost-controlling rather than a production-maximizing approach to farm management. Intensive grazing systems are reportedly less erosive than row-crop production, conducive to overall animal health, capital extensive rather than capital intensive, and cow-focused rather than focused on manufactured inputs. However, milk production with intensive grazing systems has been found to be 3% to 10% lower than with confinement feeding. Further, ration balancing with intensive grazing systems is made more difficult when farmers do not regularly sample pasture forages. No representative studies of the economic impact of intensive grazing in a northeastern state are present in the grazing literature. Study DescriptionA stratified random sample was drawn from grazing dairy farmers in a five-county region of northeastern Pennsylvania, characterized by agronomic and topographic features similar to the major milk producing regions in New York and Vermont. FINPACK financial management software, developed by cooperative extension specialists at the University of Minnesota Center for Farm Financial Management was used to analyze production, cost, sales, and financial data. A supplemental survey was developed to collect pasture management data including number of paddocks, residency period, cows per paddock, and farmer demographic characteristics. Enterprise costs and returns were estimated for pasture, hay and corn silage crops, and for dairy. Factors including cash crop expense per acre, pasture acres per cow, debt-to-asset ratios, and cash flows were related to increasing grazing intensity using logistic regressions. Applied QuestionsWhat is the relationship of costs and returns with moderate intensive grazing, where cows are rotated among paddocks at intervals of 3 to 21 d compared with hay and corn silage? Moderate intensive grazing achieved the lowest costs per ton of dry matter ($30.57) and the highest returns to operator management and labor ($129.02; Table 1). Are returns to intensive grazing of dairy cows primarily related to forage production or milk production? The economic benefits of intensive grazing are related to lower production costs of forages with frequent pasture rotation, which offset typically lower milk production levels achieved by grazing cows. What factors motivate dairy farmers to increase intensity of grazing? Factors associated with increasing intensity of grazing management in the study include excess pasture acres per cow, debt-to-assets greater than 40%, and negative cash flows after payment of all cash expenses and family living expenses. Will grazing systems tend to become more specialized? Evidence from the study indicates that farmers now practicing moderate-intensive grazing plan to increase the intensity/usage of their grazing systems. These farmers tended also to be the most highly educated and innovative. All of this suggests that grazing systems will continue to become more highly specialized. RecommendationsIntensification of grazing systems represents a feasible option for dairy farmers with high debt levels and poor cash flows to maintain farm profitability. Compared with alfalfa or corn silage, costs per dry matter ton of forage with intensive grazing can be as much as 50% lower. However, dairy farmers who increase intensity of grazing must recognize two major negative factors: (i) ration-balancing is likely to be more difficult with intensive grazing than with confinement feeding, and (ii) milk production is likely to be lower than with confinement feeding, particularly during the transition period for the grazing system. Farmers can offset lower milk production with intensive grazing systems through increases in feed and livestock inventories. Regular sampling of pasture forages and ration balancing, which were not done by the typical grazing farmer in this study, can also contribute to maintaining milk production levels. Table 1Enterprise budgets for intensive grazing and forage crops, per acre. Moderateintensive grazingAll hayCorn silageYield in DM† tons 2.09 2.02 4.15Value per DM ton $92.19 $96.92 $71.44Gross return$192.92$195.81 $313.25‡Average storage loss 0% 12% 13%Gross return after storage loss$192.92$172.31$272.52Total costs $63.90$151.82$214.76Returns to operator management$129.02 $20.49 $57.76Break-even DM yield including storage and labor costs 0.69 ton 1.78 ton 3.22 ton‡Cost per ton DM (less storage)$30.57$85.41$59.48†DM = dry matter. ‡Includes farm program deficiency and crop insurance payments of $14.57.