Demonstration of Livestock Grazing as an Alternative to Row Crops on Highly Erodible Land Following CRP Contracts

Demonstration of Livestock Grazing as an Alternative to Row Crops on Highly Erodible Land Following CRP Contracts

Summary

Rationale:
There are 30,948 acres in Adams County, Iowa, currently enrolled in the USDA Conservation
Reserve Program (CRP). These acres comprise approximately 20 percent of the Highly Erodible
Land (HEL) in the county. Land use in this area has changed dramatically since 1960, when
pasture and hay land comprised 64 percent of the farmland. By 1985, this figure dropped to 40%,
and row crop acres increased by 25 percent. This study is concerned with the management of
steep side hills in long-term forage production with cattle or sheep to increase profits and reduce
soil erosion and chemical runoff. Accomplishing the goal of more profitable grazing operations
would add to the economic development of not only Adams County, but other areas with similar
topography, soil resources, and patterns of land use.

Objectives:
1) Demonstrate the feasibility of rotational grazing and short duration intensive grazing.
2) Demonstrate the effectiveness of a contour lane for moving livestock in a rotation grazing
system to reduce the potential for gully erosion from cattle paths.

3) Demonstrate the effectiveness of high intensity electric fences in a planned grazing system.
4) Develop a database for 100 existing Conservation Reserve Program (CRP) contracts in Adams
County that will describe predominant soil types, type of vegetation, quality of existing fences,
type and quality of existing water sources, and ownership characteristics.

Methods:
This project originated with a group of local farmers, businessmen, and agency people that were
concerned about how land currently enrolled in CRP would be farmed at the end of the contracts.
The local group formed the Southern Iowa Forage and Livestock Committee (SILFLC). They
worked with researchers at Iowa State University and the Soil Conservation Service to develop
research and demonstration projects, with the goal of providing information to landowner on how
they can return their CRP land to production in an environmentally safe and economically
feasible manner.

Results:
It seems unlikely that significant amounts of land currently in the CRP in southern Iowa will be
allocated to cow-calf production when the contracts expire. This conclusion is based solely on
the underlying economics of row-crops and livestock production. Under the baseline
assumptions, it seems that almost all CRP land represented by the sample will shift into row-crop
production when the contracts terminate. This contrasts with national surveys of landowner
intentions that show 20-50 percent of CRP land will remain in permanent vegetation.

Low productivity of soils, defined as those with a SCR less than 35, are more likely to shift into
grazing activities. However, this shift only occurs when several changes are made to the baseline
assumptions, such as: 1) a significant increase in feeder prices, 2) a reduction in expected crop
yields whether due to productivity decreases, risk, or acreage reduction required for conservation
practices, 3) the reduction or elimination of farm program payments, or 4) the imposition of
stringent soil-erosion restrictions. Under the low price assumptions, however, a significant
proportion of this land cannot earn positive returns to land and management.

Rotational grazing seems to easily outperform continuous grazing systems on a return per acre
basis. However, many unknowns remain on sustainable stocking rates, calf and cow
rates-of-grain, expected lifetimes for fences, water systems and cows, and underlying production
risk. Maximizing returns per acre for the cow-calf enterprise makes sense from a regional
perspective, reflecting land constraints. An individual producer, however, with a fixed cow
investment and access to low-priced conventional pasture might still prefer an extensive
production system to rotational grazing.

Economic Analysis:
In comparisons among enterprises that differ in their investment requirements, fixed costs often
play a pivotal role. The row-crop budgets include capital recovery costs for the machinery used
in the enterprise. For an established operator, particularly one with excess machinery capacity,
these fixed costs are likely an overestimate. In the livestock budgets, depreciation on purchased
breeding stock and an opportunity (or interest) cost on the cow herd investment constitute nearly
25 percent of total production costs. For an established operator, these are all non-cash costs;
consequently, they may not be included in a decision to expand or grow the cow herd. Further,
they may overstate the actual return to investment acceptable to a producer with few alternatives

for marginal land or excess labor. Because the importance of fixed cost differs by individual
operation, the incentives to shift CRP land to either row-crop or livestock enterprises cannot be
unequivocally determined.