Economic Analysis of Grazing and Subsequent Feeding of Steers from Three Fescue Pasture Alternatives

Cattle grazing tall fescue (Festuca arundinacea Schreb.) infected with the endophytic fungus, Acremonium coenophialum, typically experience toxicity symptoms, resulting in poor animal performance. However, potential exists for compensatory gains during subsequent finishing. This study provides an economic analysis of three grazing alternatives along with subsequent feedlot performance. The pasture alternatives were endophyte-infected ‘Kentucky 31’ tall fescue (IF); IF interseeded with ladino clover (Trifolium repens L., IFL); and endophyte-free ‘Missouri 96’ tall fescue (MO). Three years of agronomic data from pastures and animal performance data from steers (Bos taurus) were collected. Alternatives were compared via budgeting of returns above costs. In the grazing phase, MO was the most profitable alternative budgeted for 2 out of 3 yr, but IFL was the most profitable alternative on the average, and IF was least profitable all 3 yr. In the feedlot phase, cattle that previously grazed IF were most profitable on the average and for 2 out of 3 yr. For the whole program, including both grazing and feedlot phases, IFL was most profitable in all 3 yr. Retaining ownership of grazed cattle through the feedlot phase increased returns for 2 out of 3 yr for IFL and MO and for all 3 yr for IF. When whole-farm analysis was based on 3-yr average animal performance data, IFL was most profitable with and without retained ownership of grazed steers. MO was more profitable than IF when steers were sold after grazing, but IF was slightly more profitable than MO when producers retained ownership during finishing. Retaining ownership increased returns for all three alternatives. Research QuestionA recent survey of forage and animal science extension specialists in 21 states concluded that over 90% of the tall fescue pastures in most states were infected with an endophyte fungus, causing annual losses estimated to exceed $600 million. Forage producers might increase their income by replacing infected fescue with endophyte-free fescue or by using a legume to dilute the toxicity. The purpose of this study was to evaluate the relative profitability of alternative fescue grazing systems and subsequent feedlot performance. Cattle could be sold after grazing or the forage producer could retain ownership in the feedlot. Literature SummaryInferior performance of animals grazing endophyte-infected fescue during the summer is well documented. Subsequent feedlot performance has been somewhat variable, however. Study DescriptionThree alternatives were evaluated (i) endophyte-infected Kentucky 31 tall fescue (IF), (ii) endophyte-infected Kentucky 31 tall fescue interseeded with ladino clover (IFL), and (iii) endophyte-free Missouri 96 tall fescue (MO). Stocker steers were grazed on pastures and then placed in a feedlot in three different years at the Southeast Kansas Branch Experiment Station. Budgeting of returns above costs was used to measure the relative profitability of the three systems. Based on the assumption that the producer has IF and has to consider whether to replace it with MO or IFL, costs considered included variable costs, establishment costs for MO, and costs of interseeding clover for IFL. Linear programming models of a representative commercial farm were used to evaluate the grazing alternatives in a whole-farm situation. Applied QuestionShould a producer who grazes endophyte-infected fescue consider interseeding a legume or planting endophyte-free fescue? For steers sold after grazing, establishing endophyte-free fescue was the most profitable alternative in 2 out of 3 yr. Because of plentiful summer rainfall in 1987, however, the endophyte-infected fescue interseeded with clover was most profitable in 1987 and on the average (Table 1). Endophyte-infected fescue had the lowest grazing returns for all 3 yr, indicating that forage and cattle producers who have endophyte-infected fescue should consider other grazing alternatives, especially if the cattle are sold at the end of the grazing phase. In the feedlot, for 2 out of 3 yr and on the average, steers that had previously grazed endophyte-infected fescue were considerably more profitable than the two other alternatives. This result, however, should be interpreted with some caution. First, the feedlot for this study was located close to the pastures. This minimized feedlot placement stress and eliminated a pasture-to-feedlot hauling cost. Second, literature indicates that subsequent feedlot performance for steers that have grazed endophyte-infected fescue has been somewhat variable. Overall, endophyte-infected fescue interseeded with ladino clover tended to be more profitable than either endophyte-infected fescue or endophyte-free fescue. Endophyte-free fescue was most profitable 2 out of 3 yr in the grazing phase and endophyte-infected fescue was most profit 2 out of 3 yr in the feedlot phase. But when ownership was retained through the feedlot, grazing of endophyte-infected fescue interseeded with ladino clover was most profitable all three years. Three years of data used in this study are not adequate for a thorough risk analysis. For example, if problems are encountered establishing endophyte-free fescue, the profitability ofthat strategy would be greatly reduced. Similarly, if lack of rainfall hindered establishment or growth of the legume, endophyte-infected fescue interseeded with ladino clover would be less attractive. In the current study, we budgeted interseeding of ladino clover every other year. There is also price risk associated with steers that have grazed endophyte-infected fescue and, of course, there is considerable price risk while cattle are in a feedlot. Should producers who graze fescue consider retaining ownership in the feedlot? Whether retaining ownership is more profitable than selling after grazing requires careful analysis in each situation and involves considerable risk. When 3-yr average data were used, retaining ownership was more profitable than selling after grazing. In 1987, however, when plentiful rainfall enhanced fescue and clover growth, selling after grazing was considerably more profitable than retaining ownership for endophyte-infected fescue interseeded with ladino clover; and, in 1988, selling after grazing was more profitable than retaining ownership for endophyte-free fescue. Table 1Returns above costs considered based on 3-yr average production data from three fescue pasture alternatives.† Units IF‡ IFL‡ MO‡ Budget analysis Sell after grazing$/head−4522−9 Feedlot only$/head 38 7−5 Retain ownership$/head 847 5Whole-farm analysis§ Sell after grazing$/farm44 54647 09945 864 Retain ownership$/farm46 55547 89546 170†Based on the assumption that the producer has IF and must consider whether to replace IF with MO or IFL; costs considered included variable costs, establishment costs for MO, and costs of interseeding clover for IFL. ‡IF = endophyteinfected ‘Kentucky 31’ tall fescue (65% of the plants infected),IFL = IF interseeded with ladino clover, MO = endophyte-free ‘Missouri 96’ tall fescue (less than 10% of the plants infected). §The representative southeastern Kansas farm produced wheat, soybeans, grain sorghum, hay, and calves from a cow-calf enterprise.