Economic Returns for Purchased or Contract‐Grazed Stockers on Marshall Annual Ryegrass

Abstract

Output and profitability of stocker production depend largely on stocking rate, but the optimal stocking rate may be different for contract grazing and traditional ownership of cattle (Bos taurus). Little previous research has been conducted on economic returns under contract grazing for different stocking rates. Data from a grazing experiment performed at the E.V. Smith Research Center (Macon County, Alabama) in 2004 were used in an analysis of the economic benefits of contract grazing vs. traditional ownership. In the experiment, the highest stocking rate (SR) resulted in the maximum gain ha−1 (G) but not always the maximum return ha−1. For traditional ownership, returns ha−1 were highest at 6.17 steers ha−1 under typical price margins. Under contract grazing, the highest experimental stocking rate (7.41 steers ha−1) produced the highest returns. If resources to purchase cattle are not limited, traditional ownership was superior to contract grazing under all but extremely unfavorable price margins. If capital to purchase stockers is limited, contract grazing may provide higher total returns. Shrinkage level can influence the relative profitability of contract grazing versus traditional ownership. Contract grazing may be preferred in some situations with high expected shrinkage, where ownership would be preferred with lower expected shrinkage.