Bioeconomic modeling of livestock production, rangeland management and forage systems in a dynamic context
Date
2008
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Abstract
This work focuses on optimal livestock management in a dynamic framework. The first essay utilizes linear programming to analyze proper herd management during periods of drought. It also examines the use of summer hay as an option to alleviate the negative impacts of drought on cattle producers. Findings show that while financial returns are greatly impacted by varying cattle prices, optimal management decisions are driven more by weather changes than price changes. Further analysis shows that although allowing summer feed improves long term returns to producers, the main benefit of such a strategy is the ability to carry increased inventories though drought, with the increased returns coming post-drought. The second essay utilizes dynamic programming to determine proper stocking rates when future forage production is related to current use of rangelands. The model maximizes the Bellman Equation using a Chebychev interpolation process. Results show that profit maximizing producers will leave just over half of total production as standing forage. Further analysis shows that while returns are impacted by both cattle and corn prices, optimal management decisions do not change with changes in either of these. Stocking decisions are mainly driven by animal efficiency and land productivity. The third essay adds the element of stochastic weather to the model utilized in the second essay. Specific attention is given to how producers make stocking decisions in the face of random weather events. Again, producers leave just over half of carrying capacity as standing forage when acting optimally. However, if growing season precipitation is unknown at the time the stocking decision is made actual standing forage may vary from this desired outcome, resulting in a decrease in future stocking rates. It is shown that a producer with knowledge of growing season precipitation will be more profitable than a producer without this knowledge on average by 21%. Again, stocking decisions are mainly driven by land productivity and animal efficiency as well as whether or not a producer has knowledge of current year precipitation.
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Subject
bioeconomic
dynamic programming
forage systems
grazing management
livestock
rangeland management
range management