Current corn prices along with reduced availability of perennial pasture have some producers asking about the economics of turning cropland into forage for cow/calf operations. So three Nebraska Extension specialists. Jay Parsons, Mary Drewnoski, and Daren Redfearn, got together to answer these questions in a February webinar:
“Will producing annual forages provide greater net returns than growing corn?
“Can growing forages pay the cash rent on good crop ground?”
“Is converting a pivot into perennial grasses for pasture going to improve profits?”
The short answer to all these questions is “No.” But that answer is qualified by assumptions that the Extension Specialists made when doing their analysis. They caution that there is a difference between “providing an answer” and “finding the best solution” for your operation. You might come up with a different answer by substituting your realities for the assumptions they made, so let’s take a look at those.
Their analysis was cost-based and included the assumptions that: land costs remain the same whether you grow corn or forage: ownership costs on equipment do not change (i.e. you don’t sell the combine); and, a grazing day is valued according to pasture rental rates. They also assumed that the land being converted was productive corn ground (230 bushel average yield).
Based on those assumptions they found that corn provides greater net returns than converting to annual forages, unless you’re making well below $600 per acre on corn. Growing forage can’t pay cash rents because those are based on the value of growing corn, and is higher than the $100 or so return on forage production.
Converting a pivot of good corn ground to pasture is also difficult to justify. Establishment of the pasture will affect cash flow in the short term, and even when they amortized those costs over ten years, rental value only exceeded annual costs by about $150 – less than what could be expected from growing corn.
But, as they noted earlier, your situation may vary from the examples they provided. You might also be converting cropland that isn’t quite as profitable which would change the picture. Or, you might be able to get financial assistance for making the switch from the Natural Resource Conservation Service’s Conservation Stewardship and EQIP Programs. You can read here about how that worked for the Schooley Ranch, and get a link to help you connect with an NRCS office near you.
To help you take a closer look at costs and returns for your operation, Parsons, Drewnoski and Redfearn created these Excel-based decision tools that include their examples.
• Replacing corn with annual forage for grazing cow/calf pairs – Excel file
• Replacing corn with perennial forage for grazing cow/calf pairs – Excel file
• Cost of annual forage when paying cash rent on cropland – Excel file
• Corn grain production vs corn silage with oats cover crop – Excel file
You can also download the Webinar slides, or watch the complete webinar on line here.
