Livestock > Outlook & Prices > Prices
March 2024
Internal and external uses compete for hay and grazing land
Cow-calf producers need forages. Corn stalks can supplement forage supplies. Still, pasture and hay are the key forage resources. Growing forages takes land.
On-farm land use decisions involve trade-offs. If you choose to grow hay to earn income from cattle, you give up the opportunity to earn income from growing something else, corn for example, on that land. Economists call earnings you forego to use your resources where you choose, rather than employing them somewhere else, opportunity cost. All resources–land, labor, machinery, capital–can be employed somewhere else. Thus, all resources have opportunity costs wherever you choose to employ those resources.
How to evaluate resource allocation decisions
The more clearly you can define your opportunities and alternatives, the better you position yourself to more easily evaluate trade-offs. This will help eliminate some alternatives, which will limit the number of alternatives that require number crunching. The thought process may go something like this:
- What resources do you have?
- What opportunities or alternative ways do you have to use those resources?
- What are the advantages and disadvantages of each of those alternatives?
- How much income, costs, and net earnings would each alternative have?
Some opportunity costs are straight forward
Explicit opportunity costs are costs that can be seen and are obvious from choosing one option over another. For example, renting out land or enrolling it in Conservation Reserve Program (CRP) to collect a payment forego income you could earn by farming the land yourself.
Agricultural production involves a bundle of resources, rather than a single input. Typically, the goal is to maximize the return to the bundle of resources. That complicates calculating opportunity costs for individual resources.
People often value the excitement of earning today significantly higher than future earnings. It’s human nature. It’s the tug of immediacy of a promised benefit versus a payoff that’s possibly years down the road. That’s a trade-off.
People may forego potentially higher returns for other reasons. Some people really like seeing cows on pasture and realizing the environmental benefits of grazing cattle.
An Iowa Beef Center Cow-Calf Producer Survey indicates the four largest competitors for buying or renting pasture or hay acres are conversion to row crops, other livestock producers, CRP and recreation.
Twenty-five percent of Iowa farms have cattle
The Census of Agriculture is a complete count of US farms and ranches and the people who operate them. Even small rural and urban parcels of land count if they normally produce $1,000 or more of agricultural products per year. USDA released data from the Agriculture Census for 2022 on February 13, 2024.
Iowa has a total land area, including non-agricultural land, of 35,747,295 acres. Iowa has 86,911 farms, totaling 29,978,165 acres. Average Iowa farm size is 345 acres. Iowa has 21,750 farms that have cattle, comprising about 9.7 million acres operated or 447 acres per farm. Many of these farms have both crop and livestock enterprises. To know what business farms are primarily engaged in, the North American Industry Classification System can be used. Iowa has 8,311 beef cattle ranching and farming operations (think cow-calf) and 1,478 cattle feedlots (Table 1). Iowa has 1,317,872 acres in beef cattle ranching and farming averaging 159 acres per farm. There are 788,222 acres in cattle feedlots or 533 acres per farm.
According to an Iowa Beef Center Feedlot Operator Survey, 84.1% of respondents indicated that they produce 50% or more of their feed needs on their own farm. Respondents also reported having (owning or renting) sufficient land to utilize manure produced by their own operation.
Competition for land is intense
Most agricultural land in Iowa, 25,881,597 acres or 86.3% of the total land in farms, is used to grow crops. Of this cropland, 23,520,694 acres are harvested cropland, 2,078,005 acres are cropland idle or used for cover crops or soil-improvement, but not harvested and not pastured or grazed, 255,065 acres are other pasture and grazing land that could have been used for crops without additional improvement, 27,213 acres are cropland on which all crops failed or were abandoned, and 620 acres are cropland in summer fallow.
Woodland accounts for 1,224,543 acres or 4.1% of all agricultural land in Iowa. A majority of this is woodland not pastured versus woodland pastured at 921,340 acres and 303,203 acres, respectively. Permanent pasture and rangeland, other than cropland and woodland pastured, accounts for 1,687,658 acres or 5.6% of all agricultural land in Iowa (Figure 1). Land in farmsteads, homes, buildings, livestock facilities, ponds, roads, wasteland, etc. is 1,184,367 acres or 4.0% of Iowa’s agricultural land.
In 2022, Iowa had 1,619,175 acres enrolled in CRP, Wetlands Reserve Program (WRP), Farmable Wetlands Program (FWP) or Conservation Reserve Enhancement Program (CREP) (Figure 2). Operations with land enrolled in these government programs are counted as farms, but the acres are not counted as agricultural land.
Clayton county had the most CRP, WRP, FWP, or CREP in Iowa with 45,631 acres in 2022. Polk county had the lowest enrollment with 4,644 acres. There were seven counties with 30,000 or more CRP, WRP, FWP, or CREP acres, 25 counties with 20,000 to 30,000 acres, 16 counties with 14,000 to 20,000 acres, 13 counties with 12,000 to 14,000 acres, 21 counties with 9,000 to 12,000 acres, and 17 counties with less than 9,000 acres.
Lee Schulz, Chief Economist, Ever.Ag Livestock Division; ISU extension livestock economist (on leave), lschulz@iastate.edu
