Understanding the Value of Grass in Nebraska
Nebraska has one of the highest summer pasture rental rates for cow-calf pairs or stocker/yearlings of anywhere in the United States. On a price per pair per month or price per head basis, Nebraska rental rates are at the top when compared to neighboring states and the nation. While prices have moderated after the rapid run up that occurred after 2014 and 2015, they are still historically quite strong. Nebraska Extension annually publishes the results of a survey titled “Nebraska Farm Real Estate Report” that documents reported pasture rental rates. This report can be found at the University of Nebraska-Lincoln Ag Economics website at agecon.unl.edu.
There are a number of factors that contribute to the strong pasture rental rates found in Nebraska. These factors include the following three, among others.
The first is that Nebraska has approximately 9 million acres of corn planted annually. These corn acres, many of which are on irrigated ground, provide abundant crop residue grazing for cattle in the fall and winter. The availability of this feed resource helps to drive demand for summer pasture grazing.
The second is the synergy of corn, distiller’s grain production, cattle feeding and harvest facilities in Nebraska. These factors work together to produce strong demand for quality calves and feeder cattle. Market prices in Nebraska are typically some of the strongest in the nation.
The third is a historically strong ranching community with vocational ranchers competing for grazing resources. Many operators are looking to grow their business and expand. Leasing grazing resources provides them with an opportunity to do this.
Grazed forage is frequently valued on an animal unit month basis or AUM. An AUM, which is 780 pounds of air dried forage, is approximately the amount of grass that a 1,000 pound cow will eat in a month. Assuming that an AUM is worth $30, this is equivalent to $77 per ton into the belly of the 1,000 pound cow. Grass is valuable in Nebraska!
This value of grazing highlights the economic importance of understanding how to manage grass in a way that maintains or improves plant health, vigor and production, while efficiently harvesting what is grown with cattle. Developing an effective grazing management strategy can be accomplished in part by asking and answering these three questions. What are the species of grass present and the current level of forage production? What could potentially be here based on soil type, rainfall and topography? What drivers of change are available to move the production system in a desired direction?
For a rancher, effectively growing and harvesting grass with grazing livestock is one of the primary economic engines that drive the business. Understanding the value of grass and the opportunities available to grow and harvest more of it are fundamental to ranch success. What is the value of grass in your operation? What skills, infrastructure or changes could help you cost effectively grow and harvest more of this valuable grass?
Interviews with the authors of BeefWatch newsletter articles become available throughout the month of publication and are accessible at https://go.unl.edu/podcast.