USDA extends deadline to apply for pandemic assistance to livestock producers with animal losses<\/a> – Morning Ag Clips<\/p>\nIn the Southern Rolling Plains, wheat production has two main sources of income, grain and forage grazing.\u00a0 Every year, wheat farmers have the option to choose between grazing or not grazing their wheat, and also, define which grazing strategy will fit economically better in their operations.<\/p>\n
In this issue we are going to analyze four different alternatives from the wheat farmer point of view. \u00a0Our objective is to analyze each grazing alternative considering that you lease out the wheat pasture, or you allocate those costs to your own stocker business operation.<\/p>\n
An estimated of the value of the cost of gain will be calculated for each grazing system so it can be compared to the most profitable option with today\u2019s wheat prices and production costs. Return on Investment (ROI) on each alternative is going to be compared to help farmers make the best decision given their costs, prices, and production expectations.<\/p>\n
The following scenarios considered most common wheat grazing systems in the area were analyzed and compared to wheat grain only production system:<\/p>\n
Scenario 1<\/strong> (Wheat Grain Only): In this base case scenario wheat forage production will not be grazed. Wheat is going to be produced to be only harvested.\u00a0 An average estimated wheat yield of 35 bu\/acre was expected (Table 1).<\/p>\nScenario 2<\/strong> (Wheat Dual Stocker ~700 Lb.): This scenario contemplated a dual-purpose wheat production, pulling all cattle before March 1st<\/sup> and harvesting 100% of the planted area. \u00a0A drag in yield of 5 bu\/acre was considering due to the grazing effect. A total of 84 pounds of gain were estimated (Table 1).<\/p>\nScenario 3<\/strong> (Wheat Dual Stocker ~800 Lb.): \u00a0This scenario represents a dual-purpose wheat production system that keeps those stockers from the early grazing phase through May 1st<\/sup>. \u00a0In order to graze those stockers during the late grazing phase, approximately 33% of the planted area is going to be required for late grazing and is not going to be harvested. \u00a0Estimated yield for the harvested area resulted in 30 bu\/acre with a total estimated production of 156 pounds per acre (Table 1).<\/p>\nScenario 4<\/strong> (Grazed Out): Grazed out all wheat with no income from grain.\u00a0 This scenario assumes bringing more cattle during the second grazing phase to efficiently use all the forage resources and increasing the total pounds gained per acre.\u00a0 A total production of 275 pounds per acre were estimated (Table 1).<\/p>\nTable 1. Scenario Assumptions<\/h4>\n![\"\"](\"https:\/\/amarillo.tamu.edu\/agecon\/files\/2021\/09\/t1.png\")
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Given this year\u2019s high wheat prices and higher costs, Wheat Grain Only production showed a higher net income when compared with dual-purpose wheat systems with a yield drag of 5 bu.\/acre, or total grazed out wheat.<\/p>\n
The sensitive table below (Table 2) showed the pound of gain value required for the Scenario 2 (Dual Purpose Wheat Stocker ~700) to have a similar net income as the Wheat Grain Only Scenario. Considering a 5 bu\/acre reduction in yield, farmers should charge 73 cents for pound to compensate for the loss in wheat grain income (assuming a farm wheat price of $6.8 \/bu). However, if now yield drag is considered, this scenario is more profitable than wheat grain only.\u00a0 \u00a0\u00a0\u00a0<\/strong><\/p>\n
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Today we return to winter wheat decision making. Whether you’re a rancher looking for forage or a landowner looking for a partner to graze, its important to consider the leasing structure. What will you pay\/accept? Is it on gain or per head? Today we review some more profitability outcomes for different leasing rates on winter wheat.<\/p>\n![\"\"](\"https:\/\/amarillo.tamu.edu\/agecon\/files\/2021\/09\/Screen-Shot-2021-09-20-at-9.06.44-AM.png\")
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