Economic Analysis of Major Dairy Forage Systems in Pennsylvania: The Role of Intensive Grazing

Abstract

The economic impact of intensive grazing for a representative Pennsylvania Holstein (Bos taurus) dairy farm was evaluated using a Monte-Carlo farm level simulation model. Ten harvested forage combinations with or without intensive grazing of pasture were modeled. For each of 10 farm scenarios, least-cost rations were developed to meet the requirements for the level of milk production. Net cash farm income, and the after-tax net present value of ending net worth were used as profitability measures. The after-tax net present value distributions of the 10 dairy farm scenarios were also compared using stochastic dominance analysis. Results showed that under the assumption of equal milk production level (18 800 Ib/cow per yr) and depending on the forage crop mix, annual net cash farm income with intensive grazing increased by 14 to 25% compared with farms without intensive grazing. These increases translated into $8 400 to $12 400 more in annual net cash farm income for a typical Holstein dairy farm with a 60-cow herd. The observed increase in income and profitability for farms with intensive grazing was largely due to the decreased cost of milk by an average of $1.20 to $1.42/cwt, depending on the forage crop mix analyzed. A risk assessment of intensive grazing using stochastic dominance analysis showed that most farms with intensive grazing were preferred to the nongrazing dairy farms under the assumption of equal milk production output per cow. When milk output per cow was allowed to fall for farms with intensive grazing, however, the stochastic dominance analysis showed that the robustness of the preference for intensive grazing depended on the harvested forage mix used. Milk yields could only drop from 4 to 6% before the grazing forage crop mixes were no longer preferred under risk.