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When is it profitable to sacrificially graze a wheat crop? - a simulation analysis across Australia’s cropping belt

Lindsay Bell and John Hargreaves

CSIRO Sustainable Ecosystems/APSRU, PO Box 102, Toowoomba Qld 4350

Abstract

In poor yielding years farmers may decide to sacrifice grain yield by grazing their wheat crop. This study investigated the frequency that grazing a wheat crop may produce more revenue than harvesting for grain, and to identify situations when grazing a crop may be the more profitable option. Comparisons were made from APSIM simulation outputs of grain yield and standing biomass at flowering over 100 years. This simulation was conducted using a factorial of 3 soil types, varying in plant-available-water capacity, by 3 locations representing high, medium and low rainfall zones in 9 regions spanning Australia’s cropping belt. Under average commodity prices, grazing a crop was rarely (<10% of years) more profitable than producing grain on all soil types in the more reliable or higher rainfall locations. In the lower rainfall locations on soils with lower water holding capacity, grazing was more profitable than producing grain in more than 40% of years. However, this outcome was highly dependent on the relative commodity prices for grain and livestock. For these ‘marginal’ cropping situations a critical yield was calculated below which grazing a crop is potentially a more profitable option. Under average commodity prices, if expected grain yields are below 1.5-2.0 t/ha, then grazing is generally more profitable. A tactical decision to graze a crop when its expected grain yield is less than this critical yield could increase average profit by $10-$25/ha/yr.

Key Words

wheat, grazing, economics, forage, economics, APSIM

Introduction

Across the mixed crop-livestock regions of Australia, farmers facing poor grain yield prospects may choose to ‘open the gate and let the stock in’. This decision is often based on the prospects of obtaining an economic grain crop. However, sacrificing a grain crop for grazing could on occasions be a more profitable option in many parts of Australia’s cropping zone.

Methods

Simulation approach and assumptions

The APSIM (Agricultural Production Systems Simulator) Wheat module (Keating et al. 2003) was run using the last 100 years of historical climate data obtained from the Silo Database to predict seasonal variability in wheat biomass and grain production. A factorial of 3 locations (high, medium and low rainfall) by 3 soil types varying in plant available water-holding capacity (PAWC) were simulated for each of 9 grain-growing regions across Australia (Table 1). Simulations were designed so that N stress was prevented; wheat residue was reset to 1 t DM/ha and soil water set to 0 mm of plant available water on 1 January each year, except for the Corangamite-Glenelg-Hopkins locations (delayed until 1 February). Wheat was sown between 7 May and 10 July when 15 mm of rain had fallen over 7 days and then sown on 10 July if the rainfall criteria had not been met. Spring wheat cultivars suitable for each region were used (Table 1).

Estimating grazing and grain value

Partial budgets for grain and grazing options were estimated from APSIM outputs for grain yield at harvest and green/standing biomass at flowering (Equations 1 and 2). Standard assumptions for grain price were $200/t DW (1997-2006 average wheat price (ABARE 2006)) and harvesting cost of $35/ha. Grazing value was estimated based on assumptions of 50% utilization (U) of the wheat crop, a feed conversion rate (FCR) of 0.1 kg of liveweight per kg of forage consumed and a live-weight price (LWP) of $1.6 per kg LW (1998-2007 average for yearling trade steers (Meat & Livestock Australia's National Livestock Reporting Service (MLA NLRS)). Other costs, such as transport, transaction and sowing costs were assumed to be equal. Sensitivity analysis of different commodity price scenarios was investigated for the two enterprises.

(1) Grain value ($/ha) = (grain yield price) – harvesting cost

(2) Grazing value ($/ha) = biomass U FCR LWP

Results

The percentage of years that grazing a crop may be more profitable than harvesting grain varied considerably across the regions but was always highest on low-PAWC soils (Fig. 1). This is because in dry years less water is available to the crop to convert biomass to grain yield on these soils. This effect was also greater in the drier locations within each region. In the lower rainfall locations on lower potential soils in most regions grazing was more profitable than producing grain in > 40% of years under average prices (Fig. 1).

Table 1. Average rainfall (MAR) of locations and soil types used in each grain-growing region across Australia

Region

Location

MAR (mm)

 

Soil type

PAWC (mm)

Cultivar

Maranoa/ Balonne

Miles

655

 

Deep grey vertosol

234

Hartog

Roma

600

Shallow grey vertosol

170

 

Mitchell

560

 

Red brown earth

141

 

Border Rivers

Warialda

685

 

Deep grey vertosol

234

Hartog

Moree

585

Shallow grey vertosol

170

 

Mungindi

504

 

Red brown earth

141

 

Central West/ Lachlan

Parkes

580

 

Red kandosol

200

Janz

Forbes

520

Red sodosol

130

 

Nyngan

443

 

Red brown earth

78

 

Condobolin

430

       

Murrumbidgee

Tarcutta

645

 

Red kandosol

200

Janz

Coolamon

500

Red sodosol

130

 

Narrandera

440

 

Red brown earth

78

 

Mallee

Horsham

453

 

Sandy clay loam

167

Correll

Jeparit

378

Sandy loam

122

 

Walpeup

333

 

Sandy loam over sandy clay

45

 

Corangamite-Glenelg-Hopkins

Hamilton

700

 

Brown sodosol

213

Chara

Lake Bolac

570

Clay sand over heavy clay

138

 

Winchelsea

557

 

Clay loam

85

 

Eyre Peninsula

Cummins

430

 

Clay loam over red clay

121

Wyalkatchem

Minnipa

340

Loam over red clay

79

 

Penong

320

 

Sandy loam over sandy clay

45

 

Avon

Bakers Hill

595

 

Red deep loamy duplex

128

Wyalkatchem

Meckering

370

Deep sand

90

 

Merredin

320

 

Shallow gravel

54

 

Northern Agricultural Region

Badgingarra

575

 

Red deep loamy duplex

128

Wyalkatchem

Mingenew

410

Deep sand

90

 

Dalwallinu

300

 

Shallow gravel

54

 

Figure 1. Percentage of years that grazing at anthesis could generate more revenue than continuing through to harvest grain on soils with low PAWC across grain growing regions in Australia under average prices.

Figure 2. In regions with similar rainfall distribution average May to October rainfall and the % of years that grazing was more profitable within regions (excluding southern Victoria) were related.

On all soil types in the higher winter rainfall locations, sacrificially grazing a crop was rarely (< 10% of years) shown to be more profitable than continuing through to harvest grain. The more northern regions showed the highest percentage of years (> 40% of years) when grazing was more profitable even on the good soil types at the higher rainfall locations, due to the lower reliability of winter rainfall in these environments. Figure 2 shows that within regions with similar rainfall patterns locations with lower average rainfall between May and October had a higher frequency of years when grazing a crop at flowering could be more profitable. These relationships could be used to make extrapolations based on soil PAWC and in-crop rainfall to other locations in each region that were not included in this analysis.

A linear relationship between grain yield and the difference in income between grain and grazing activity was apparent in most situations (example in Fig. 3). This relationship can be used to predict the critical yield, below which grazing a crop is more often the most profitable option (Fig.3). This critical yield (Table 2) provides a guide for making decisions about grazing a crop when yields are expected to be below the value.

Figure 3. Revenue from grain is less than grazing a wheat crop at grain yields below 2 t/ha at Warialda on a red earth (poor soil).

Tactically grazing a crop when final grain yield is below the critical level could increase average returns by as much as $24/ha/yr at Roma in south-western Queensland and is greater than $10/ha/yr for many situations across the cropping belt (Table 2). However, it should be noted that this is calculated with perfect knowledge of final grain yield and of course there are added uncertainties when making a decisions mid-season.

Table 2. Critical grain yields range between 1.3 and 2.0 t/ha at most locations and if tactically grazed mean return from a wheat crop could be increased if final grain yield is known.

Location

Critical yield

(t DW/ha)

Increase in return ($/ha/yr)

Roma

1.82

24

Mungundi

2.05

14

Condobolin

1.54

14

Walpeup

1.34

16

Minnipa

1.31

11

Dalwallinu

1.69

15

The relative price of grain and livestock products greatly influence how often grazing a wheat crop is more profitable than continuing through to grain harvest. An increase in the grain price, as has occurred recently, greatly reduces the frequency that grazing is the more profitable option. For example, at Condobolin grazing was more profitable in 52% of years under average prices, but if grain prices increased to $300/t DW then grazing is almost never more profitable than grain production. Similar trends were observed with other locations.

Table 3. The frequency that grazing a wheat crop has more value than grain production is sensitive to relative commodity prices for livestock and grain.

Location & Region

Livestock price ($/kg LW)

Grain price ($/t DW)

150

200

250

300

Mitchell, Maranoa-Balonne

1.2

81

58

11

6

1.6

92

76

59

13

2.0

97

87

74

58

Condobolin, Central West

1.2

54

14

1

0

1.6

79

52

22

1

2.0

93

71

49

26

Walpeup, Mallee

1.2

60

27

8

6

1.6

78

58

29

8

2

95

72

56

29

Dalwallinu, Northern WA

1.2

53

13

1

0

1.6

76

50

19

1

2.0

98

68

47

25

Conclusion

This analysis demonstrates that grazing a wheat crop in low yielding years can regularly be a more profitable option than continuing to harvest especially on lower potential soils and when livestock prices are high relative to grain. If expected grain yields are below 1.5-2.0 t/ha then grazing the crop seems to be more profitable in most regions under average commodity prices. However, making tactical in-season decisions about grazing a crop can be difficult with limited knowledge of expected final grain yields. Using decision support tools such as WhopperCropper or YieldProphet might be useful for assisting growers to graze crops with more confidence.

Acknowledgements

This work was conducted for the National Feed-base Project of the Grain and Graze program, which is jointly funded by Meat and Livestock Australia, Grains Research and Development Corporation, Australian Wool Innovation, and Land and Water Australia.

References

ABARE (2006) Australian Commodity Statistics 2007, Canberra

Keating BA, Carberry PS, Hammer GL, et al. (2003) An overview of APSIM, a model designed for farming systems simulation. European Journal of Agronomy 18, 267-288

MLA NLRS (Meat & Livestock Australia's National Livestock Reporting Service) - Calendar Year National averages - Saleyard cattle price report. http://marketdata.mla.com.au Accessed on: 5/6/2008.

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