UT Beef and Forage Center

Agriculture Economics- Article

Andrew Griffith

Dr. Andrew Griffith, Assistant Professor, Department of Agricultural and Resource Economics

(865) 974-7480

agriff14@utk.edu

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One Sunday, a cowboy went to church. When he entered, he saw that he and the preacher were the only ones’ present. The preacher asked the cowboy if he wanted him to go ahead and preach. The cowboy said, “I’m not too smart, but if I went to feed my cattle and only one showed up, I’d feed him.” So, the minister began his sermon. One hour passed, then two hours, then two-and-a-half hours. The preacher finished and came down to ask the cowboy how he liked the sermon. The cowboy answered slowly, “Well, I’m not very smart, but if I went to feed my cattle and only one showed up, I sure wouldn’t feed him all the hay…” (Author unknown).

This joke came to mind as cattle producers enter the month of May which is typically the month when most fescue hay is produced. As a livestock economist, grazing, hay, and other feed costs are always top of mind when trying to pencil out a profit on the annual budget. If one assumes a 1,200 pound cow then a producer will likely have to supply approximately 36 pounds of hay per day on an as fed basis. Feeding hay for 120 days would mean 2.16 tons of hay for each cow while 150 days of hay feeding would be 2.7 tons of hay. If hay cost $80 per ton then that would mean a total hay cost of $173 per head for the 120 day feeding period and $216 per head if hay is fed for 150 days. (It is likely that most hay production cost more than $80 per ton.) This means hay costs likely account for greater than 25 percent of total cash expenses in a cattle operation.

The total cost of hay production then brings to mind the cost of pasture production since that is the primary feed source the remaining months of the year. Based on the University of Tennessee cow-calf budget, it costs about $239 per year per cow for pasture production which is approximately 40 percent of total cash costs. Thus, its costs approximately $0.33 less per head per day to graze cattle on pasture than feeding hay.
When one considers that it is less expensive to graze forage than it is to produce and feed hay then a profit maximizing producer would choose to graze as many days as possible to lower production costs. Not feeding any hay has a nice sound to it, but it is rarely possible. The summer and fall of 2019 is a great example of how the best grazing plan can be quickly pitched out the window. The late summer and fall drought meant it was nearly impossible to produce any late summer grazing or to stockpile any fescue for late fall and early winter grazing. This particular situation probably resulted in even greater hay and feeding costs with the need to start feeding hay much earlier than normal.

What is there to learn from this discussion? The lesson to be learned is that cattle producers should attempt to manage pasture to extend the grazing season, but producers should also be prepared to meet feed needs that may arise from unforeseen circumstances. With that said, most readers are probably thinking the above lesson to learn is not helpful or that it is more expensive because the producer is essentially trying to feed the cattle twice in the same year. Paying for two years of feed resources may actually be realized in the first year, but hay is a storable crop if it is kept dry.

The unknowns, unpredictability, volatility, and every other aspect of the cattle industry that makes it such a dynamic industry is probably why I find it so attractive. There are never two days that are the same, and one has to manage resources differently each year. The uncontrollable factors of the business are the unnerving part for most, but it is what excites me because there is always a new problem to solve.
Here are a couple more hay jokes. They say making hay is difficult… I don’t know, it seems rather cut and dried… A fellow told me the other day not to order any hay off Amazon because a couple days after he ordered his, they were asking him for his feed back.