The Economics of Grazing Alfalfa
Many stocker operators looking to improve the profitability of their backgrounding business have considered grazing pure alfalfa stands. Alfalfa has been associated with high animal performance (rates of gain) and is very drought tolerant (Lacefield et al). These two qualities make it very attractive to the stocker operator.
The most commonly heard complaints about grazing alfalfa are that 1) animals are more likely to bloat and 2) rotational grazing is a must. This clearly means that a higher level of management is needed for producers wishing to graze alfalfa. However, for producers who are good managers and are set up to rotationally graze, the potential benefits from grazing alfalfa can far exceed the additional costs.
The costs associated with establishing a stand of Alfalfa have been estimated to be approximately $200 per acre according to University of Kentucky Extension Beef Nutritionist Roy Burris. Yearly maintenance costs for an existing stand of Alfalfa are approximately $40 per year. These costs are highly variable and depend on the individual operation. A farm operator not currently practicing rotational grazing may incur costs such as additional fencing and paddock preparation.
Cattle grazed on alfalfa stands can show increased rates of gain exceeding 0.5 pounds per day compared to cattle on typical Kentucky fescue stands. Rates of gain have been shown to consistently exceed two pounds per day. For producers who are willing to provide the level of management needed to graze alfalfa, this may be an option worth consideration.
The Pasture and Forage Improvement Investment Tool was used to evaluate adding alfalfa to pasture for the following stocker operation. The basic scenario involves a summer backgrounder who purchases 450 pound stockers in the spring and markets feeder calves in the fall. The analysis is conducted on a per head basis and is based on the following set of assumptions.
Assumptions Before Alfalfa Establishment
- In-weight of calves – 450 pounds
- Purchase price - $110 per cwt.
- Expected Rate of Gain – 1.25 pounds per day
- Number of days backgrounded – 180 days
- Expected Sale Weight – 675 pounds
- Expected Selling Price - $96 / cwt.
- Pasture Maintenance Costs - $20 per acre
- Stocking Rate – 1 head per acre
Assumptions After Alfalfa Establishment
- Establishment Cost - $200 per acre*
- Length of Stand – 5 years
- Expected Rate of Gain – 1.85 pounds per day*
- Expected Sale Weight – 783 pounds
- Expected Selling Price - $89.44 per cwt.**
- Pasture Maintenance Costs - $40 per acre
- Stocking Rate – 1 head per acre
- Required Rate of Return – 8% per year
**Expected selling price was varied with sale weight to reflect likely price slide
Assumption Based Results
The Following table shows model results when allowing cost of establishment to vary from $100 to $300 per acre. Increased rates of gain are varied from 0.4 pounds per day to 1.0 pounds per day. Based on these specific assumptions, establishing a stand of alfalfa for grazing makes sense in several realistic situations. At increased rates of gain of more than 0.6 lbs per day, the investment yields a positive net present value at all practical establishment cost levels. Even in cases where increased rates of gain are small, adding alfalfa may increase returns if replacement costs are kept below $200 per acre.
|Increased Rate of Gain||Replacement Costs per Acre|
Clearly, based on these results, grazing alfalfa is an option worth considering for stocker operators. It is important to remember that these are only one set of decision aid results based on the preceding set of assumptions. Although these assumptions are considered to be reasonable and based on the best information available, actual values will vary considerably from one operation to the next. Readers are strongly cautioned against making decisions based solely on this one set of output. It is highly recommended that producers discuss this decision with their county extension agent for agriculture and natural resources.