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A Multi-Period Analysis of Two Common Livestock Management Strategies Given Fluctuating Precipitation and Variable Prices

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  • Ritten, John P.
  • Frasier, W. Marshall
  • Bastian, Christopher T.
  • Paisley, Steven I.
  • Smith, Michael A.
  • Mooney, Siân

Abstract

Many areas of the US recently endured a severe drought and management strategies to cope with the lack of forage production varied. A multi-period mathematical model is presented that estimates the outcomes of two common producer responses to changes in precipitation, partial liquidation and purchasing hay, given fluctuating cattle prices over a long term planning horizon. Results were further summarized with regression analysis and selected elasticities were calculated to reflect the sensitivity of outcomes to variability in precipitation and livestock prices. Although little impact was seen from utilizing additional hay as a strategy during drought, producers who follow this strategy are in a position to market more animals immediately post drought in general, resulting in better long run financial outcomes. Elasticity estimates suggest that profitability is more sensitive to variability in prices but that optimal choices of management strategies are more sensitive to variability in precipitation.

Suggested Citation

  • Ritten, John P. & Frasier, W. Marshall & Bastian, Christopher T. & Paisley, Steven I. & Smith, Michael A. & Mooney, Siân, 2010. "A Multi-Period Analysis of Two Common Livestock Management Strategies Given Fluctuating Precipitation and Variable Prices," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 42(2), pages 177-191, May.
    • Handle: RePEc:cup:jagaec:v:42:y:2010:i:02:p:177-191_00
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    Cited by:

    1. Briner, Simon & Finger, Robert, 2012. "Bio-economic modelling of decisions under yield and price risk for suckler cow farms," 123rd Seminar, February 23-24, 2012, Dublin, Ireland 122547, European Association of Agricultural Economists.
    2. Boaitey, Albert & Goddard, Ellen & Mohapatra, Sandeep, 2019. "Environmentally friendly breeding, spatial heterogeneity and effective carbon offset design in beef cattle," Food Policy, Elsevier, vol. 84(C), pages 35-45.
    3. Bastian, Christopher T. & Ritten, John P. & Derner, Justin D., 2018. "Ranch Profitability Given Increased Precipitation Variability and Flexible Stocking," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2018.

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