Economic consequences of alternative stocking rate adjustment tactics: a simulation approach

Abstract

An economic analysis of alternative stocking rate adjustment tactics is performed using a simulation model which emulates the annual decision-making situation of a rancher. The model includes variation in livestock prices and annual forage production. The manager's decisions are based on the availability of forage at 4 decision points in the year, the expected growth between the current decision point and the next, and the expected portion of the forage that is to be harvested through grazing. Livestock are bought and sold to adjust the stocking rate to equal the expected available forage for grazing. Results are obtained for 3 different stocking tactics based on 4 levels of expected forage production and livestock utilization set at the May decision point. The results reflect the differences in net returns over variable costs and the differences in annual cow investment capital associated with each tactic. The results indicate that the tactics using a maximum stocking rate of 3.6 ha/au offer the most reasonable compromise between mean and variance of net returns. The tactic with no limit on stocking rate provides the possibility of obtaining higher average annual net returns than tactics with limited stocking rates, but the variation in annual returns is considerably greater and the annual cow investments costs are higher.