Riding the learning curve on pasture cost of production

The first year will be the toughest, but after that figuring costs should be easier

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Farmers may have to rethink some common cost-of-production parameters, but it should be possible to accurately track the financial impact of growing pastures.

Grazing specialists explored cost-of-production parameters during a panel discussion at the March Profitable Pastures conference, put on by the Ontario Forage Council in Mount Forest.

Why it matters: Soil health can benefit from including grazing as part of a farm’s rotation, but it must not detract from a farm’s financial wellbeing.

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Participating on the panel were business analysis and cost of production lead John Molenhuis of the Ontario Ministry of Agriculture, Food and Rural Affairs, Melancthon Township pasture farmer and community pasture manager Mike Swidersky, and Lambton Shores mixed crop and beef farmer Blair Williamson.

Molenhuis first outlined a number of challenges farmers might face when trying to quantify the financial costs and paybacks of growing pasture.

For crop yield, he suggested, “a lot of times, it’s working the math backwards.”

If a farmer has this many head of cattle on a field, and they’re gaining an average of this much per day, then they must be eating this much per day. “So the pasture must be yielding this much per acre.”

One of several added wrinkles with perennial crops is the establishment period. Molenhuis’s example was spending $350 per acre on crop inputs in one growing season on the establishment of an alfalfa/timothy/grass mix, with minimal or no returns in that first year. This is followed by multiple years of financial returns, either through harvesting hay or pasturing, with minimal or no crop input costs.

For land costs, he suggested, the best reflection of the value is cash rent — what you would get in cash if you rented out the pasture instead of using it for for your own livestock.

But as Swidersky noted this can vary significantly depending on the quality of the land. In his neighbourhood of northwest Dufferin County, rented pasture is similar to untiled land. On poorer land, such as scrub land or lowlands, it might be better for the owner to rent it out for pasture than it is to rent it to a cash cropper or try cropping it themselves.

In pasture, fertilizer may be replaced, at least in part, by manure applied free-of-charge by the livestock. Phosphorus and potassium removal rates through pasturing are available on the OMAFRA website.

Keynote speaker Bill Thomas of Dalhousie University in Halifax addresses the 2020 Profitable Pastures conference on March 10 in Mount Forest.
photo: Supplied

Herbicides may be replaced by clipping. Fencing and water costs replace the harvest costs, with materials amortized over their useful lifetime and labour factored in for the set-up, maintenance, and moving of wires if using rotational grazing.

If aiming to grow pasture or wanting to introduce grazing of a cover crop, but without a livestock market in the area, producers could explore how far afield people will truck their livestock to take advantage of available pasture.

Swidersky predicted the contracted-out grazing of cover crops will happen more often. One challenge will be accurately factoring in the long-term benefit on soil of the cover crop. And certainly the cost of fencing must be allocated.

On the flip side, if you’re thinking of abandoning the pasture idea and harvesting the field for hay, make sure to consider the pasture’s financial contribution to the farm’s livestock operation. On its own, without taking into account the symbiotic relationship with the cattle or sheep, it might not generate a profit, Molenhuis said. When factors such as fuel and maintenance costs associated with hay harvest are allocated, the analysis could change.

For Swidersky, whose home farm is entirely in pasture for beef and sheep, with no cropping, factoring in the costs of an all-terrain vehicle is a must. They use theirs a lot, and he replaces it every three years.

Extending grazing season

Williamson, meanwhile, operates about 600 acres in crops. He has his own beef herd of about 50 head, plus there’s a maple syrup operation. When he took over the farm and started the beef herd, he began looking into expanding the grazing season. His herd grazes through the warmer months on rented pasture. For the rest of the year, he relies on cover crops, crop residues, and eventually supplements feed in the field on a feed bunk wagon.

Last summer, he planted oats/peas following wheat and the plan was to bale and wrap it in the spring of 2020. But it grew well, so they grazed it beginning Nov. 9, when the cattle came off pasture. He got out his calculator and determined costs of 90 cents per day per head for grazing, versus $2.20 per head per day for cutting, baling and wrapping. Plus, this extended the time — compared to previous years — before he fenced off a cornfield and put the cattle out into the stalks.

Molenhuis advised a “production systems approach” to analyzing pasture cost of production. The aim should be to separate the cropping expenses, then sell the feed in the pasture back into the livestock operation and account for it that way. It can be complicated, but he stressed that record-keeping systems are getting better and better so it should be easier than in the past.

“The first year is the hardest; after that, you can always go through and tweak some numbers.”

The panelists, plus the conference’s keynote speaker, had several tips for lowering pasture cost-of-production.

  • Rotational grazing: The accepted definition of rotational grazing, said keynote speaker Bill Thomas of Dalhousie University in Nova Scotia, is six or more paddocks. Four isn’t enough. If you don’t have six, or ideally, eight or more, you’re not sufficiently protecting the plant during recovery periods. “And the reason it works is because of fencing.” It makes the crop more drought resistant, of higher quality, and less susceptible to winterkill. And remember, if the pasture is allowed to enter winter with some plant growth remaining, yields will be higher in spring.
  • Multi-species grazing: From his experience with sheep, Swidersky sees multi-species grazing as at least as effective or even more effective than rotational grazing. Take the cattle off the field after they’ve eaten the upper growth, then let the sheep in and eat the lower parts of the plant (but not too low or regrowth will be diminished). Plus, the sheep can stay out longer once the ground gets wet, and this has extended the grazing season on his family’s home farm.
  • Consider higher densities of livestock in a rotational system. This could lead to longer-lasting pastures because they get a longer rest period, but it can also lead to lower labour costs — fewer groups of animals to move. Plus, it could create less stress on both livestock and handlers during moves, which will have long-term effects on herd health.
  • Fertility options: Swidersky likes to see 20 per cent waste on the hay he feeds inside the barn, because he knows that’s getting returned as fertility when the manure is spread. The result, he suggested, is pastures that persist longer without needing to be reseeded or rehabilitated in other ways. Thomas noted that, if doing soil tests to determine nutrient levels, only go down four inches. The field is not being tilled, so there is no need to go deeper.
  • Legumes: Having legumes in the mix favours higher intake by the livestock. Thomas showed results from a study in Nova Scotia indicating, because of the added weight gain that occurs and the fixation of nitrogen in the soil, it’s better to pay the extra for seed and grow legumes in the pasture mix than it is to grow only grass and apply nitrogen to the field.

About the author

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Stew Slater

Stew Slater operates a small dairy farm on 150 acres near St. Marys, Ont., and has been writing about rural and agricultural issues since 1999.

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