Using a two-price market value framework to value differences in metabolizable energy concentration of pasture across seasons

Abstract

CONTEXTInternationally, there have been focused efforts to develop methods of ranking pasture cultivars to assist livestock producers make informed decisions about investments in pastures. The Australian Forage Value Index (FVI) currently ranks cultivars for the dairy industry based on the value of differences in seasonal dry matter (DM) yield only. Metabolizable energy (ME) is the most important nutrient supplied by pasture for livestock production; its inclusion in the FVI may provide useful information for decision making. OBJECTIVEThe objective was to apply a two-price market value framework to value differences in both seasonal DM yield and ME concentration for valuing and ranking pasture cultivars. METHODSThe two-price market value framework allocates a replacement cost or salvage value to extra ME supplied by pasture during seasons when pasture is typically in deficit or surplus, respectively, of animal demand. The replacement cost and salvage value were calculated using a single (Method 1) or multiple (Method 2) nutritional components, and compared. The estimated market values for extra ME were combined with corresponding market values for extra DM yield and applied to a data set of 20 perennial ryegrass cultivars. Cultivars were ranked based on their extra annual market value compared to base cultivar Victorian. Rankings were first calculated based on the value of seasonal differences in DM yield, and then re-calculated using differences in both seasonal DM yield and ME concentration. RESULTS AND CONCLUSIONSReplacement costs of a MJ of ME of $0.023 and $0.010 were estimated for seasons of pasture deficit using Methods 1 and 2, with corresponding salvage values of $0.018 and $0.007 for seasons of pasture surplus. Compared with rankings based on the value of differences in DM yield alone, including the value of differences in ME concentrations had little effect on the rankings of individual cultivars. This result is strongly influenced by the fact that those cultivars that lead the ranking based on seasonal yield also have relatively high values for ME. SIGNIFICANCEThe two-price market value framework is one method for estimating the value of nutrients supplied by pasture and offers a simplified alternative to more common approaches for valuing pasture. The approach used here has potential for broader application and could be particularly useful for informing decisions about investments in research and innovation into traits which alter the nutritive concentrations of pastures swards and pasture species.