Economic Utilization of Forages in Production of Milk and Beef in the Northeast United States

SYMPOSIUM: PRODUCTION OF MILK AND MEAT FROM FORAGES

WAYNE A. KNOBLAUCH, ROBERT A. MILLIGAN, DANNY G. FOX, and MERRI L. WOODELL Departments of Agricultural Economics and Animal Science

Cornell University Ithaca, NY.

ABSTRACT

Economical forage production, storage, and feeding systems for production of milk, dairy steers, and steers of a traditional beef breed on a productive land resource and production of milk, dairy steers, and cow-calf operation of a traditional beef breed on a marginal land resource were calculated. Profitability of these selected livestock enterprises on the marginal land resource also was calculated.

On the productive land resource, growing either all forage and grain or only forage containing equal parts of hay crop silage and corn silage was most economical for milk production. For dairy steer and traditional beef steer production, 100% of the forage from corn silage was the system with low cost.

On the marginal land resource, the system of all hay was low cost for milk production and only a slightly lower cost system for dairy steer production. Systems of corn silage and pasture were most economical for cow-calf operations.

Dairy steer production can be com- petitive with profits from milk production on a marginal land resource, but cow-calf operations are supplementing income enterprises.

INTRODUCTION

Historically production, storage, and feeding of forages has been a topic of considerable analysis by animal scientists and agricultural economists. In today's economic environment, selection of a forage system may be even more crucial to farm profitability. With expenses of farm production rising rapidly, most not directly controllable by the individual business,

Received October 1, 1979.

it is imperative that component strategies of a farming system that utilizes resources most efficiently be selected. Perhaps no single component strategy has such extensive im- plications for profitability as selection of a forage production, storage, and feeding system. Capital investments in forage machinery, feed storage units, and feeding equipment in the hundreds of thousands of dollars and production expenses to grow or purchase feeds in the tens of thousands of dollars are not uncommon. Minimizing these costs and using resources efficiently can increase the likelihood of profitability.

With present high beef prices many people are advocating utilization of marginal land resources of the Northeast for beef production. Estimates of farm profitability with selected milk and beef production enterprises can provide insight into future production systems that may exist on these resources.

The objectives are: 1) to determine the most economical forage production, storage, and feeding system for milk production, finishing dairy steers to slaughter weight, and finishing steers of a traditional beef breed to slaughter weight on a productive land resource; 2) to determine the most economical forage production, storage, and feeding system for milk production, finishing dairy steers, and a traditional beef cow-calf operation on a marginal land resource; and 3) to compare profitability of milk production, feeding dairy steers, and a traditional beef cow-calf operation on a marginal land resource.

METHOD OF STUDY

Representative farm land resource situations are specified for a productive land resource and a marginal land resource. Acreage, productivity, and rotation constraints are specified for two soil resource situations (Table 1). These resource situations are constructed to be representative of those in many areas of the Northeast.

1981 J Dairy Sci 64:2059-2070 2059

2 0 6 0 KNOBLAUCH ET AL.

TABLE 1. Productive and marginal land resource si tuations: yields and rotat ion constraints .

Representat ive Rota t ion farm size(s) Yield per hectare constraints

Productive land resource 194 and 121 ha Hay crop silage a Corn silage Corn grain

Marginal land resource 65 ha Pasture

Hay b Corn silage

14.1 MT 37 MT

5.9 MT

2.2 MT

3.9 MT 27 MT

Min imum 32 ha M a x i m u m 162 and 89 ha respectively

20 ha suitable for pasture

Min imum 28 ha Max imum 16 ha

ayie lds above the 32 ha m i n i m u m increase to 16 MT/ha. Hay crop silage is 40% dry mat ter .

by ie lds on the 16 ha which could grow corn increase to 5.04 MT/ha.

T h e m o s t e c o n o m i c a l f o r a g e s y s t e m is a n a l y s i s c o n c e r n s t h e c h o i c e o f t h e b e s t s y s t e m d e t e r m i n e d f o r e a c h l i v e s t o c k e n t e r p r i s e o n in t h e i n t e r m e d i a t e to l o n g r u n ; t h e r e f o r e , p r o d u c t i v e a n d m a r g i n a l l a n d r e s o u r c e s . T h i s v a r i a b l e a n d f i x e d c o s t s a re c o n s i d e r e d . C o s t s o f

TABLE 2. Livestock enterprises on productive and marginal land resources.

Herd size or Product ion or feedlot capacity weight gain

Productive land resource Dairy livestock

Dairy cows 120 Heifers 77

Dairy steers 400 a Traditional beef breed steers 400 a

Marginal land resource Dairy livestock

Dairy cows 35 Heifers 23

Dairy steers Beef cow-calf operation

180 and 130 b 50, 46, 68, and 56 c

7,258 kg milk 28 months-b i r th to

freshening 64 - 567 kg 204 - 476 kg

5,897 kg milk 28 months-b i r th to

freshening 64 - 567 kg 227 and 354 k g

feeder steers u 191 and 299 k~ feeder heifers u

aThere were 328 head of dairy steers sold annual ly and 532 head of traditional beef breed steers sold annually. A lowra te of gain ration (NEg .99 Mcal/kg dry mat ter ) is fed to 386 kg for dairy steers and 295 kg for traditional beef breeds. A high rate of gain ration (NEg 1.26 Mcal/kg dry mat ter) is fed to finish weight.

bThere were 148 and 97 head of dairy beef sold annual ly with a low-high rate of gain and low-low rate of gain, respectively.

CNumber of beef cows with all hay forage system and fall sale of feeders; all hay and spring sale of feeders; corn silage and pasture and fall sale and corn silage; and pasture and spring sale, respectively. Ninety percent calf crop weaned.

dFall and spring sale weights, respectively.

Journal of Dairy Science Vol. 64, No. 10, 1981

SYMPOSIUM: PRODUCTION OF MILK AND MEAT FROM FORAGES 2061

capital investments are based on new equipment purchased at 1978 prices. After the most economical forage systems are determined, profitability of livestock enterprises on the marginal land resource is considered for the most economical forage system. In the profitability calculation, an existing dairy farm is used to compare profitability of continued milk production and converting to beef production.

Forage systems contain differing proportions of hay crop and corn silage. On the productive land resource the three forage compositions for milk production are: 1) hay crop silage as the only forage, 2) equal parts of hay crop silage and corn silage, dry matter; and 3) mostly corn silage with 30% of the forage dry matter from hay crop silage. For dairy steers and traditional beef steers the first two forage compositions for milk production and two compositions containing 75 and 100% of forage from corn silage are compared.

On the marginal land resource systems based on corn silage are not considered. Forage systems for milk production and feeding dairy steers are 1) all hay or 2) equal parts hay and corn silage.

Traditional beef cow-calf systems analyzed are: 1) an all hay system in which the first cutting is harvested as hay and remaining growth pastured and 2) a corn silage and pasture system in which all hay production is pastured. Sale of feeders in the fall or backgrounded and sold in the spring also are studied for each forage system.

The most economical forage system is determined by calculating the total production, storage, a n d feeding costs for each forage composition. This calculation has three components. The first is formulation of rations for each forage composition; the second is deter- mination of storage facilities and equipment required and their associated costs; and the third is calculation of crop production costs and feed purchases or sales.

In formulating rations, milk production and rate of gain are the same for each roughage composition. Milk production is 7,258 kg per cow per year on the productive land resource and 5,897 kg per year on the marginal land resource (Table 2). A least cost balanced dairy ration model was used for milking cows, dry cows, and heifers (6, 10, 12). Rations for dairy

TABLE 3. Investments and annual costs of forage harvesting, storage, and feeding equipment for alternative hay crop silage and corn silage forage systems for a 120 cow dairy, 1978.

% Hay crop silage in forage mix 100 50 30

($) Forage harvesting machinery a 36,400 39,000 39,000 Forage storage b 65,500 67,000 53,500 Grain storage c 12,400 10,900 9,500 Feeding equipment d 11,300 12,500 12,500 Total investment 125,600 129,400 114,500

Annual cost e 22,600 24,170 22,080

alncludes a mower-conditioner-windrower, rake, forage harvester with pick-up head, and forage wagons for each system plus a crop head for the two systems containing corn silage.

bHay crop silage is stored in upright concrete silos and corn silage in concrete tilt-up bunker. Investments include unloaders for tower silos.

CHigh moisture corn is stored in upright concrete silos. Investment includes the unloader. dlncludes silo blower and mixer wagon. eAnnual costs include depreciation, repairs, interest, insurance, taxes, and labor valued at $3.75/h. Labor

hours required are variable from farm to farm, but relative usage is believed accurate. If labor is operator supplied, it is not a cash cost. Lower labor requirements allow for completion of other tasks, management, or leisure activities.

2062 KNOBLAUCH ET AL.

steers and traditional beef steers were formulated by a least cost ration program and performance simulation model (1, 2, 5). MI rations formulated for the productive land resource are designed to attain a low rate of gain initially (NEg [net energy for growth] .99 Mcal/kg dry matter) and a high rate of gain (NEg 1.26 Mcal/kg dry matter) for finishing. On the marginal land resource, these low-high rates of gain and a low-low (NEg .99 Mcal/kg dry matter for finishing) rate of gain both are considered (Table 2). Feed requirements for the cow-calf operation are formulated by a bud- geting procedure (4).

The second component of analysis is calculation of investments and annual costs of forage harvesting, forage and grain storage, and feeding equipment. Herd size and feedlot

capacities indicated in Table 2 are for these calculations. On the productive land resource, dairy herd size and beef feedlot capacities are specified to require approximately the same crop production capability (forages and corn grain). On the marginal land resource the size of t h e livestock enterprise is fled to the forage producing capability of the land resource.

The third component of the analysis is to utilize the formulated rations, the land resource with its crop yields and rotation restrictions (Table 1), and the storage and feeding losses of the specified systems to determine crop enterprise acreages, crop production costs, crop sales, and off-farm feed purchases (11). The three components yield partial budgets which can be used to select the most economical forage system. Profitability calculations on the

TABLE 4. Investments and annual costs of forage harvesting, storage, and feeding equipment for alternative hay crop silage and corn silage forage systems for a 400 head capacity dairy steer and traditional beef steer feedlot, 1978.

% Hay crop silage in forage mix 100 50 25 0

($) Dairy steers

Forage harvesting machinery a 36,400 39,000 39,000 37,500

Forage storage b 32,600 37,200 35,000 21,500 Grain storage c 34,200 29,200 19,300 15,200 Feeding equipment d 11,300 12,500 12,500 12,500 Total investment 114,500 117,900 105,800 86,700

Annual cost e 20,680 22,240 20,450 17,100 Traditional beef breed steers

Forage harvesting machinery a 36,400 39,000 39,000 37,500

Forage storage b 30,900 30,800 30,000 19,000 Grain storage c 36,600 36,600 34,200 29,200 Feeding equipment d 11,300 12,500 12,500 12,500 Total investment 115,200 118,900 115,700 98,200

Annual cost e 20,870 22,310 21,920 18,830

alncludes a mower-conditioner-windrower, rake, forage harvester with pick-up head, and forage wagons for each system plus a crop head for the two systems containing corn silage.

bHay crop silage is stored in upright concrete silos and corn silage in concrete tilt-up bunker. Investments include unloaders for tower silos.

CHigh moisture corn is stored in upright concrete silos. Investment includes the unloader. dlncludes silo blower and mixer wagon. eAnnual costs include depreciation, repairs, interest, insurance, taxes, and labor valued at $3.75/h. Labor

hours required are variable from farm to farm, but relative usage is believed accurate. If labor is operator supplied, it is not a cash cost. Lower labor requirements allow for completion of other tasks, management, or leisure activities.

marginal land resource require total farm budgets which utilize partial budgets for the most economical forage system.

R ESU LTS

Results for productive and marginal land resources are presented separately. For each land resource investments are discussed, budgets are presented, and conclusions are summarized.

Productive Land Resource

Investments and annual cost of forage harvesting, forage and grain storage, feeding equipment, and labor exhibited the same trend with increasing corn silage feeding for all three livestock enterprises (Tables 3 and 4). Invest- ments and annual costs increased as corn silage was included in the forage mix at 50% and then decreased with increasing corn silage in the forage mix. This can be attributed to three factors. I) Addition of a crop head to the forage machinery increased investments. 2)

Increased forage dry matter is handled in systems using larger amounts of corn silage. The increase in dry matter stored increased costs because of storing a smaller amount of hay crop silage at a higher cost per uni t without attaining full benefit of economies of storing corn silage in a bunker silo. At higher corn silage feeding this effect is overcome. 3) Ration requirements and, thereby, investments in grain storage decrease as corn silage content of the forage mix increases.

The most economical forage system for production of milk contains 50% of forage dry matter from hay crop silage and 50% from corn silage for farms of both 194 and 121 ha productive land resource (Table 5). This results even though forage harvesting, feed storage, and feeding costs are largest for this system. In feeding dairy cows, hay crop silage and corn silage complement each other with protein from hay, keeping purchases of soybean meal down and energy from corn silage reducing corn grain requirement. On the 194 ha farm,

TABLE 5. Crop production, feed purchase and harvest, storage and feeding costs, and crop sales for milk production with three alternative forage systems on 194 and 121 ha representative farms.

Farm size, 194 ha Farm size, 121 ha % Hay crop silage in forage mix % Hay crop silage in forage mix

100 50 30 100 50 30

($) Crop production a

Hay crop silage 22,250 12,280 6,640 22,250 12,280 6,640 Corn silage 9,650 17,050 . . . . 9,650 17,050 Corn grain 191350 25,930 27,310 1,750 5,550 6,040

Feed purchases b Corn grain . . . . . . . . . . . . 40,040 13,950 5,650 Soybean meal 4,940 18,900 28,830 4,940 18,900 28,830 Minerals 1,390 1,550 1,620 1,390 1,550 1,620

Crop sales b Corn grain (380) (25,210) (33,100) . . . . . . . . . . . .

Forage harvest, storage, and feeding annual

Costs c 22,600 24,170 22,080 20,770 24,110 22,210 Annual cost 70,150 67,270 70,430 91,140 85,990 88,040

acrop production costs are from (11). All variable costs of production, including labor at $3.75/h are included. Drying and marketing costs are added for corn grain sold.

bcorn grain is purchased at $2.60 per 25 kg, soybean meal at $260 per .9 MT, and urea at $180 per .9 MT. Corn grain is sold for $2.25 per 25 kg.

CFrom Table 3 with decreased costs where all corn grain requirements cannot be produced and consequently need not be stored.

the land extensiveness o f the system of hay crop silage only leaves a lmost no land for producing crops for cash sale. Al though both crop p roduc t ion expenses and feed purchases are lowest, the a lmost comple te use of the land resource for feeding dairy l ivestock prevents this system f rom being the lowest cost. The system of mos t ly corn silage proves less economical because of large purchases of soybean meal. If corn grain as a cash crop were more profi table or a more prof i table cash crop were grown, the system of mos t ly corn silage could become mos t economical .

When the land resource is reduced to 121 ha, the system with hay crop silage as the only forage becomes relatively less economical . Over 95% of the corn grain mus t be purchased. The corn silage system allows for p roduc t ion o f mos t of the requ i rement for corn grain ; however ,

total feed purchases and crop p roduc t ion expenses are more than for equal p ropor t ions o f hay crop silage and corn silage.

The mos t economica l forage system for p roduc t ion of s laughter weight dairy steers for both the 194 and 121 ha land resource is the total corn silage forage system (Table 6). A system with 100% of forage f rom hay crop silage on the 194 ha land resource has the lowest crop p roduc t ion and purchased feed costs. Unlike systems conta in ing larger amounts of corn silage, there are no crops available for cash sale. The crops for cash sale, in combina t ion with lower harvest, storage, and feeding costs, make the total corn silage system the lowest cost. While the result is the same on the 121 ha land resource, causes are different . Corn grain purchases on the 100% hay crop silage system are larger than total feed purchases for the

TABLE 6. Crop production, feed purchase and harvest, storage and feeding costs, and crop sales with four alternative forage systems on 194 and 121 ha representative farms for slaughter weight dairy steer production.

100 50 25 0 100 50 25 0

Hay crop silage 14,350 9,670 6,160 6,110 14,350 9,670 6,160 6,110 Corn silage 7,850 13,910 20,520 . . . . 7,850 13,910 20,520 Corn grain 281650 29,070 29,110 23,120 11,400 10,330 9,360 3,610

Feed purchases b Corn grain 1,120 . . . . . . . . . . . . 43,990 30,920 20,910 23,400 Soybean meal 4,080 7,410 10,190 13,910 4,080 7,410 10,190 13,910 Urea, rumensin,

and minerals 910 1,140 1,610 2,300 910 1,140 1,160 2,300 Crop sales c

Dry hay . . . . . . . . (150) (8,700) . . . . . . . . (150) (8,700) Corn grain . . . . (10,730) (19,710) (17,480) . . . . . . . . . . . . . . . .

cost d 20,680 22,240 20,450 17,100 18,090 19,990 19,700 16,160 Annual cost 70,090 66,650 61,570 56,880 92,820 87,310 81,690 77,310

aCrop production costs are from (11). All variable costs of production, including labor at $3.75/h are included. Drying and marketing costs are added for corn grain sold.

CHay sold as baled hay at $50 per .9 MT. Incorporating harvesting loss differentials, .9 MT of dry hay can be sold for every 2.59 MT of hay crop silage produced. Corn grain is sold for $2.25 per 25 kg.

dFrorn Table 4 with decreased costs where all corn grain requirements cannot be produced and consequently need not be stored.

other systems. Combining lower feed costs for corn silage systems with increase of crop sales as larger quant i t ies of corn silage are p roduced results in significantly lower costs for the all corn silage system.

The mos t economica l forage system for t radi t ional beef steer p roduc t ion for both the 194 and 121 ha land resources is again the total corn silage system (Table 7). The same relationships among crop produc t ion expenses, feed purchases, and crop sales exist as with dairy steer product ion . The different ial narrows, however, be tween all hay crop silage and all corn silage. Forage system costs are reduced 12% with tradit ional beef breeds compared with a lmost 20% with dairy beef. This difference results pr imari ly f rom the larger a m o u n t o f roughage used by dairy beef, which accentuates the dif ference be tween systems.

The di f ference in most economica l com- posi t ion o f forage be tween dairy and beef is significant and results f rom the na ture o f p roduc t ion in the two l ivestock enterprises. The dairy cow is pr imari ly a milk produc ing animal and, consequent ly , requires large amount s of pro te in ; beef animals, however , are p roduc ing weight gain and require relatively larger quanti- ties of energy and less protein. These conclusions are consis tent with the historical impor tance of milk produc t ion in the Northeast .

Marginal Land Resource

The marginal land resource is 65 ha with product iv i ty , ro ta t ion constraints , and locat ion characterist ics which put these opera t ions at a compara t ive disadvantage. Most o f the small, poor qual i ty land resources in the Nor th- east are used for dairy produc t ion . This analysis

TABLE 7. Crop production, feed purchase and harvest, storage and feeding costs, and crop sales for slaughter weight traditional beef steer production with four alternative forage systems on 194 and 121 ha representative farms.

100 50 25 0 100 50 25 0

Crop production a Hay crop silage 11,650 7,900 6,150 6,110 11,650 7,900 6,150 6,110 Corn silage . . . . 6,170 10,880 16,820 . . . . 6,170 10,880 16,820 Corn grain 32,260 32,470 31,140 25,780 14,720 13,940 11,990 6,820

Feed purchases b Corn grain 1,540 . . . . . . . . . . . . 44,410 32,920 26,970 28,870 Soybean meal 4,160 7,360 10,560 14,270 4,160 7,360 10,560 14,270 Urea, rumensin,

and minerals 1,170 1,530 2,030 2,830 1,170 1,530 2,030 2,830 Crop sales c

Dry hay . . . . . . . . (1,900) (8,700) . . . . . . . . (1,900) (8,700) Corn grain . . . . (8,930) (14,270) (12,560) . . . . . . . . . . . . . . . .

Forage harvest, storage, and feeding annual cost d 20,870 22,310 21,920 18,830 18,250 19,690 19,330 16,430

Annual cost 70,480 68,810 66,510 63,380 94,360 89,510 86,010 83,450

acrop production costs are from (11). All variable costs of production, including labor at $3.75/h are included. Drying and marketing costs are added for corn grain sold.

CHay sold as baled hay at $50 per .9 MT. Incorporating harvesting loss differentials, .9 MT of dry hay c a n

be sold for every 2.59 MT of hay crop silage produced. Corn grain is sold for $2.25 per 25 kg. dFrom Table 4 with decreased costs where all corn grain requirements cannot be produced and consequently

need not be stored.

TABLE 8. Investments and annual costs of forage harvesting, storage, and feeding equipment for two hay and corn silage forage systems for milk and dairy steer production on a 65 ha marginal land resource, 1978.

Dairy Dairy steers

% Hay in forage mix % Hay in forage mix

100 50 100 50

Forage harvesting machinery a 15,100 30,500 15,100 3 O, 500 Forage storage b 9,100 20,000 7,700 21,200 Feeding equipment e . . . . 2, 300 6,700 8,400 Total investment 24,200 52,800 28,500 60,100

Annual cost d 4,970 9,710 6,090 11,310

alneludes a mower-conditioner-windrower, rake, baler, and bale wagons for the all bay system and a forage harvester and forage wagons for the system containing corn" silage.

bHay is stored in a hay barn and corn silage in upright concrete silo. Investment includes silo unloader. Clncludes silo blower for all systems, feed cart for corn silage system in milk production, and mixer wagon

for beef steer production. dAnnual costs include depreciation, repairs, interest, insurance, taxes, and labor valued at $3.75/h. Labor

hours required are variable from farm to farm, but relative usage is believed accurate. If labor is operator supplied, it is not a cash cost. Lower labor requirements allow for completion of other tasks, management, or leisure activities.

TABLE 9. Crop production, feed purchase, harvest, storage and feeding costs, and crop sales for milk production with two forage systems on a 65 ha marginal land resource farm.

% Hay in forage mix

100 50

Crop production a Pasture 960 960 Hay 8,000 5,360 Corn silage . . . . 3,130

Feed purchases b Corn grain 11,540 6,020 Soybean meal 650 3,950 Minerals 320 360

Crop sales c Hay (850) (2,050)

cost d ' 4,970 9,710 Annual cost 25,590 27,440

aCrop production costs are from (11). All variable costs of production, including labor at $3.75/h are in- eluded. Drying and marketing costs are added for corn grain sold.

bcorn grain is purchased at $2.60 per 25 kg, soybean meal at $260 per .9 MT, and urea at $180 per .9 MT. CHay sold at $50 per .9 MT. dFrom Table 8.

focuses on the most efficient use of these resources to produce forage for milk production, dairy steer production, and traditional beef cow-calf operation. A comparison of profitability of each of these livestock enterprises provides insight into potential future uses of this land resource.

Investments and annual costs of forage harvesting, storage, and feeding equipment are almost double with the system that contains corn silage for both milk and dairy steer production (Table 8). More forage is stored with corn silage in the ration, and higher investments are required to harvest and store two forages rather than only baled hay. For cow-calf production, investments in forage system exhibit a similar pattern when corn silage is included but are lower as a result of most or all of the hay production being pastured.

Most Economical Forage Systems

The most economical forage system for milk

production with a 35-cow dairy farm is the all hay forage system (Table 9). Equipment investments to include corn silage in the forage mix outweight advantages of lower purchases of corn grain and fewer acres necessary to meet forage requirements. However, if a suitable storage structure and feeding system were on the farm, then use of those resources would be profitable if economical harvesting was available. Thus, if a farm currently is following a forage system with hay as the only forage and inclusion of corn silage would necessitate investments in harvest, storage, and feed equipment, the likely result would be lower profits.

For dairy steer production, the most economical forage system per head sold is to feed the ration with low rate of gain to 3 86 kg and a ration for high rate of gain to market weight with a system of all hay forage (Table 10). With the ration for low-low rate of gain, 35% fewer animals can be fed per year, which is no t offset by the 28% lower forage cost. Only minor

TABLE 10. Crop production, feed purchase, harvest, storage, and feeding costs for dairy beef production with two forage systems and rates of gain on a 65 ha marginal land resource.

Low-low rate of gain Low-high rate of gain % Hay in forage mix % Hay in forage mix

100 50 100 50

Crop production a Pasture 960 960 960 960 Hay 8,000 4,960 8,000 4,960 Corn silage . . . . 3,580

Feed purchases b . . . . . . . . Corn grain 19,540 12,210 32,420 25,340 Soybean meal 1,200 2,180 1,850 3,330 Urea, rumensin and minerals 240 340 410 510

Crop sales c Hay (1,600) (I,000) (1,600) (1,050)

cost d 6,090 11,310 6,090 11,310 Per head sold 355 356 325 330

Annual cost 34,430 34,540 48,130 48,940

bcorn grain is purchased at $2.60 per 25 kg, soybean meal at $260 per .9 MT, and urea at $180 per .9 MT. CHay sold at $50 per .9 MT. dFrom Table 8.

differences of cost exist between systems of hay and of hay and corn silage within each rate of gain.

For fall and spring sale of feeder calves from the traditional beef cow-calf operation, the system of corn silage and pasture is most economical per 454 kg produced (Table 11). The major factor is an increase in beef cow units carried per ha without offsetting increases in equipment costs. Since all hay land is pastured and corn silage is the exclusive source of winter feed, only one set of harvesting equipment is required.

Profitability of Marginal Land Resource Farms

Two measures of profitability are cash income and return to operator's labor and management. Cash income is cash receipts minus cash expenses. Return to operator's labor and management is cash income reduced for depreciation on buildings and equipment, the opportunity cost of the capital investment, and unpaid family labor. Return to operator's labor and management is, therefore, a residual claimant.

Cash expenses are representative of 1978. Charges for depreciation and interest on investment are based on market values for the

base dairy farm. The additional investment in housing and feeding equipment to convert to dairy steer production is charged at new investment costs in 1978. Only fencing is a needed investment to convert dairy facilities to cow-calf operation.

Prices are conservative approximates of future prices. With milk prices related to cost of production, milk prices are almost certain to increase. A recent Congressional study projects milk prices at 75% of parity to average $15.85/45 kg in 1983 and average over $13.75 from 1979 to 1983. The $11.50/45 kg appears conservative in comparison, but the relationship between receipts and expenses is believed to be representative of an intermediate time situation. The same applies to beef and feeder prices. They are below current prices but are believed to be representative of a longer run situation.

Profitability of milk production exceeds all others but is only slightly more profitable than feeding dairy steers to slaughter weight with a system of low-high rate of gain (Table 12). Feeding dairy steers a ration for low-low rate of gain does return more than $20,000 cash income but less than $100 return to operator's labor and management. Traditional beef cow- calf operations show $7,190 and $9,430 cash

TABLE 11. Crop production, feed purchase, harvest, storage, and feeding costs for traditional beef cow-calf operation with two forage systems and time of calf sale on a 65 ha marginal land resource.

All hay forage Silage and pasture forage Fall Sale Spring Sale Fall Sale Spring Sale

Pasture 960 960 960 960 Hay 6,180 6,180 2,160 2,160 Corn s i l a g e . . . . . . . . 3,430 3,430

Feed purchases b Corn grain 450 2,360 . . . . . . . . Soybean m e a l . . . . . . . . . . . . 730 Urea and minerals 440 490 820 820

Forage harvest, storage, and feeding annual cost 4,450 4,450 5,640 5,640

Annual cost per 454 kg 498 449 382 351 Annual cost 12,480 14,440 13,010 13,740

bcorn grain is purchased at $2.60 per 25 kg, soybean meal at $260 per .9 MT, and urea at $180 per .9 MT.

incomes for fall and spring sale of feeders, bu t returns to labor and managemen t are negative.

CONCLUSIONS

Selection of forage system can have a substant ial impact on costs in p roduc t ion of milk and beef. On product ive land resource, growing either all forage and grain or only forage conta in ing equal parts of hay crop silage and corn silage is the mos t economical forage system for milk product ion . For dairy steer and t radi t ional beef steer product ion , the forage system conta in ing 100% of the forage from corn silage is the system with low cost.

On marginal land resource, the system of all hay forage is the mos t economical system for milk product ion. Investments in corn silage harvest equ ipmen t and storage facility are n o t economical for the small acreage of corn silage. For dairy steer product ion , forage system costs are comparable, bu t cost is slightly lower for the system with hay as the only forage. However, systems of corn silage and pasture are the mos t

economical for the beef cow-calf operat ion. Corn silage permits a larger n u m b e r of cows to be carried wi thou t an offset t ing increase in e q u i p m e n t costs, and the result is a lower system cost per 454 kg of beef produced.

Comparat ive future prof i tabi l i ty of converting a 3 5-cow dairy on marginal land resource to al ternative beef p roduc t ion enterprises found milk product ion is the mos t profi table. However, for excel lent managemen t and the most economical forage system, dairy steer p roduct ion was only slightly lower. Tradi t ional beef cow-calf operat ions were lowest in pro- f i tabil i ty and at small size is a par t - t ime enterprise for supplement ing income.

Dairy steer p roduct ion with excel lent managemen t and a rat ion con ta in ing corn silage for low-high rate of gain competes favorably with prof i tabi l i ty of milk product ion . However, market risk is much greater with dairy steer product ion. Assessment of t ransferabi l i ty and a t t a inmen t of new m a n a g e m e n t ski]Is in moving from milk to beef p roduc t ion is crucial. It is believed that a manager of a 5,897 kg dairy

TABLE 12. Profitability of milk production, feeding dairy steers to slaughter weight, and a traditional beef cow-calf operation on a 65 ha marginal land resource.

Milk production

Dairy steers Traditional beef cow-calf Low-low Low-high Feeders Feeders rate rate sold in backgrounded of gain of gain fall sold in spring

Cash receipts 57,510 a 65,150 b Cash expenses d 27,780 44,545 Cash income 29,930 20,605 Depreciation and interest

on investment e 16,200 19,110 Unpaid family labor 1,400 1,400 Noncash expenses 17,600 20, 510 Return to operator's labor and management 12,330 95

Hours of labor required 4,000 2,670

($) 99,400 b 17,270 c 19,770 c 65,625 10,080 10,340 33,775 7,190 9,430

21,100 16,510 15,950 1,400 1,400 1,400

22,500 17,910 17,350

11,275 -10,720 -7,920 2,670 2,040 2,040

alncludes milk sales at $11.50/45 kg, cull cow sales at $36/45 kg, and calf sales at $85 per head. bDairy steers sold at $55/45 kg. Clncludes cull beef cows at $34/45 kg, fall sale of steer feeders at $60/45 kg and heifers at $59/45 kg, spring

sale of backgrounded steers at $56/45 kg and heifers at $53/45 kg. dlncludes all cash crop production and feed purchase expenses, cash nonfeed livestock production costs,

property taxes, and insurance. Does not include interest payments on debt capital. eweighted average cost of capital used is 8%. Includes increased investment of $21,370 for housing with

180 head feedlot and $15,960 with 130 head feedlot for dairy steer production.

herd can attain high management in dairy steer production. If this is not the case, substantial reduction of income may occur.

Beef cow-calf production on marginal land resource is not as profitable as alternative livestock enterprises. Requiring about one- half the labor of the 35-cow dairy, cow-calf operations of this size are likely to be supple- ments to income.

A substantial portion of marginal land resources in the Northeast which exists from dairying likely will not return to production. Some may be used for part-time beef or sheep production or other alternatives. Long run profitability, however, will determine longevity of those operations on marginal land resource. If the land owner is employed off the farm and the farm becomes primarily a residence, facilities, land, and family labor then have little alternative use. Income over cash costs then usually determines feasibility of a beef cow-calf enterprise. Further work is needed to identify the best management system under these conditions, considering available labor, off farm income, and markets for feeder cattle or beef.

REFERENCES

1 Black, J. R., and D. G. Fox. 1975. Ration formulation for growing and finishing cattle, a Telplan program. Staff paper 76-7. Dep. Agric. Econ., Michigan State Univ., East Lansing.

2 Black, J. R., and D. G. Fox. 1977. Simulation of feedlot performance of growing and finishing cattle, a Telplan program. Users manual 56:1. Dep.

Agric. Econ., Michigan State Univ., East Lansing. 3 Bratton, C. A. 1978. Dairy farm management

business summary, New York 1977. A. E. Res. 78--8, Dep. Agric. Econ., Cornell Univ., Ithaca, NY.

4 Fox, D. G. ND. Nutrient requirements and guide- lines for feeding the beef herd. Fact sheet 1300. Dep. Anita. Sci., Cornell Univ., Ithaca, NY.

5 Fox, D. G., and J. R. Black. 1977. A system of predicting performance of growing and finishing beef cattle; report of beef cattle feeding research, 1977, Michigan State Univ. Agric. Exp. Sm. Rep. 328, East Lansing.

6 Harsh, S. B., D. HiUman, and J. Schoonaert. 1972. Least cost dairy ration - ration Rx, Telplan users manual no. 31. Dep. Agric. Econ., Michigan State Univ., East Lansing.

7 Hoglund, C. R. 1976. Dairy systems analysis handbook. Agric. Econ. Rep. 300. Dep. Agric. Econ., Michigan State Univ., East Lansing.

8 Irrer, T. M., and B. F. Jones. 1971. Economies of size in Indiana beef cattle feedlots. Agric. Exp. Sin. Bull. 881. Purdue Univ., Lafayette, IN.

9 Knoblanch, W. A. 1977. An economic analysis of hay crop production, storage and feeding systems on New York dairy farms. A. E. Ext. 77-2. Dep. Agrlc. Econ., Cornell Univ., Ithaca, NY.

10 Knoblauch, W. A. 1979. Forage system economics; research and ideas for the future. Pages 47-52 in Anim. Sci. Mimeo No. 40. Dep. Anita. Sci., Cornell Univ., Ithaca, NY.

11 Knoblauch, W. A., R. A. Milligan, and M. L. Woodell. 1978. An economic analysis of New York dairy farm enterprises. A. E. Res. 78-1. Dep. Agric. Econ., Cornell Univ., Ithaca, NY.

12 vanLieshout, M. M., L. E. Chase, W. A. Knoblauch, R. A. Milligan, and C. J. Sniffen. 1979. Least cost balanced dairy rations. A. E. Ext. 79-5, A. S. Mimeo 41. Dep. Agric. Econ. and Anita. Sci., Cornell Univ., Ithaca, NY.

Economic Utilization of Forages in Production of Milk and Beef in the Northeast United States

Documents

NEIC Bibliography - Northeast Iowa Council

CONSUMER PREFERENCES OF BEEF TENDERNESS AND MECHANICAL MEASUREMENTS

Beef Cattle-Breed Identification - Marshall County

Principal's Newsletter - Northeast High School

ACCELERATED PROCESSED RESTRUCTURED BEEF STEAKS

NORTHEAST ALABAMA SETTLERS

Ethanol production from AFEX-treated forages and agricultural residues

Null subjects in Northeast English

techniques and consumer acceptability of beef - AgEcon Search

PEDIGREE BEEF DAY - Harrison & Hetherington

Heifer Production on Rangeland and Seeded Forages in the Northern Great Plains

Simulation of Cooking Cylindrical Beef Roasts

ANNUAL REPORT - Northeast Frontier Railway

Beef Risk Assessment Argentina - | Preferred by Nature

Population Structure and Genetic Diversity of Italian Beef

Investigating the Utilization of Mushrooms in Beef-Based

CERTIFIED LOWLINE BEEF

The Impact of Technologies on Beef Production

Mortality caused by gastrointestinal nematodes in beef cattle

Raising Beef is Environmentally Sustainable