Is Your Grass Making You Money?

Once you get your grazing organized (see how to do that here), you will see a lot of benefits. You will have more grass, more water, then birds, bugs, and wildlife will return. These are pretty cool benefits! Many would call this sustainable agriculture. There is another aspect of sustainability that doesn’t get much attention, though, and that is economic sustainability.

I participated in Ranching for Profit’s Executive Link program. It is for people who really want to make improvements to their operation and be held accountable. At most meetings, an industry leader is brought in to share some of what they are doing on their operation. At one meeting, Kit Pharo, of Pharo Cattle Company, spoke about his grass based cattle genetics & his ideas on how to raise good seed stock. What he had to say was quite interesting. However, the most interesting and profound thing he said was that for agriculture to be sustainable, it must first be economically sustainable. For a ranch to continue on, young people must want to take the operation into the future. Young people do not want to take over an operation that isn’t profitable because it is not fun to live in poverty.

Kit’s revelation got me to thinking about the economics of our grass. I wanted to know empirically how much each paddock was producing economically. Over the course of several years I developed a spread sheet to give me that information and this winter I even added color! Pretty cool! In this article I will share that information, so you might want to grab a note pad, a pencil, and a calculator.

A lot of agriculture production is expressed as $/acre. When we were custom grazing, I liked to have our revenue and expenses explained in ‘per acre’ terms because that is how our land rent was paid. When dealing with grass, I use stock days per acre (SDA) because it is immediate and basic. You don’t have to do any more calculations based on class of stock or length of time. One stock day is the amount of forage a 1000lb dry cow will eat in one day. A dry pregnant cow is the reference class of animal used and has a value of 1.0SAU.

As you change your class of animal, the SAU for that animal will change. If you have a 1350lb dry, pregnant cow, her value is 1.23SAU. A 1350lb lactating cow with calf at foot has a value of 1.75SAU (these figures are from the Holistic Management’s ‘Standard Animal Unit Tables’). We rarely graze only one animal at a time, so the SAU for the herd must also be calculated. If there are 80 cow/calf pairs in a group & the cows weigh ~1350lbs, the SAU for the herd is 140SAU (80 pair X 1.75SAU = 140SAU).

Once you have the herd’s value, you then require the size of the paddock. If your paddock size is 20 acres and your herd grazes for one day, the herd has taken 7SDA (140SAU/20acre = 7SDA). If the herd grazed for three days in the same paddock, the SDA would be 21SDA ((140SAU X 3days)/20acres) = 21SDA). The graze days & paddock size can be found on your grazing chart. The SAU of the herd has to be calculated separately as the herd size changes. Once I move the herd to another paddock, I write the graze days in pen so I can access the data quickly when I do my analysis at the end of the season.

Throughout the season, record the number of graze days and herd size for each paddock. Normally, I get two rotations during the growing season & one graze during the dormant season at the latitude of Athabasca, Alberta. When it is time to do an economic analysis, I add up all the stock days taken from each paddock then divide by the size of the paddock, to get the SDA’s taken that year. It is then time to turn that figure into $/acre.

When we custom grazed, the going rate for our area was $1/pair/day. Since I work in SDA, I had to convert that rate into $/SD. Therefore, $1/pair divided by 1.75SAU/pair = $0.57/SD. I use custom grazing rates because custom grazing is a choice. You decide if you graze your own cattle or someone else’s cattle. This means your grass is separate from your livestock so even if you own your cattle, they still need to be charged for the grass they eat.

The following table is part of the grazing summary for one grazing cell. Let’s look at Paddock 2 because it was fully grazed by the time I wrote this article. From my grazing chart, I calculated 3,582SD’s were taken from the paddock during the growing season and 4,800SD’s during the dormant season. Since the paddock size is 40ac, the total forage taken from the paddock in 2018, was 210SDA ((3,582SD + 4,800SD)/40ac = 210SD). In this example, 1SD is worth $0.58/SD, so Paddock 2 made $121.54/acre (210SD X $0.58 = $121.54). Now that I have this information, my analysis turns to looking at which paddocks are contributing most to financial prosperity and which ones are sucking hind tit.

I like this type of analysis because it is unambiguous. I know Paddock 2 made $62.62 per acre more than Paddock 3. There’s no speculating. It’s in black & white and I can compare what happens from year to year. Further, I can try a pasture amendment in one paddock to see how much of a financial benefit it produces. The grazing summary lets me know if that amendment was worth the expense and if so, maybe it should be done on more acres. Conversely, maybe it wasn’t worth the expense and we should try something else. I find that pretty powerful.