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

Published online by Cambridge University Press:  26 January 2015

John P. Ritten ,
W. Marshall Frasier ,
Christopher T. Bastian ,
Steven I. Paisley ,
Michael A. Smith  and
Siân Mooney
John P. Ritten
Affiliation:
Department of Agricultural and Applied Economics, University of Wyoming, Laramie, WY
W. Marshall Frasier
Affiliation:
Department of Agricultural and Resource Economics, Colorado State University, Fort Collins, CO
Christopher T. Bastian
Affiliation:
Department of Agricultural and Applied Economics, University of Wyoming, Laramie, WY
Steven I. Paisley
Affiliation:
Department of Animal Science, University of Wyoming, Laramie, WY
Michael A. Smith
Affiliation:
Department of Renewable Resources, University of Wyoming, Laramie, WY
Siân Mooney
Affiliation:
Department of Economics, Boise State University, Boise, ID
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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.

Keywords

Drought managementmathematical programmingherd liquidationprice cyclecattle managementQ12C61D24
Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 42 , Issue 2 , May 2010 , pp. 177 - 191
Copyright
Copyright © Southern Agricultural Economics Association 2010

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