Economic Comparison of Improved and Unimproved Pastures in Producing Beef in Eastern South Dakota

Native pastures are not as profitable as improved pastures which are adapted to this area. The purpose of this study is to compare net returns that can be realized by farmers in eastern South Dakota when improved rather than un-improved pastures as well as native grass. The problem is one of determing the profitability, form the whole farm standpoint, of using various improved pastures for grazing yearling beef steers compared with the profitability of using unimproved pasture. A large number of yearling feeder cattle are shipped out of South Dakota each year. Adding weight to these cattle though grazing improved pastures could increase farm income in the state. Gross income and total costs determine net income from and enterprise. However, in most pasture experiments, costs are neglected. The ultimate practice decide d upon will depend partially upon the financial status of the person involved. Farmers can use the opportunity cost principle deciding where they should allocate their limited capital. The desirability of a practice depends partially on the time period over which the returns are spread. Renters may desire to be insured a profitable return within the time covered by their present lease, whereas owners are able to recover their costs and a profit over the life of the practice. The individual farmer must consider the problem according to the resources available on his farm. The fact that the average cost per unit is less than the market price does not mean that intensifying production will increase the net revenue. It is much more important to know how the marginal revenue compares with the marginal cost of an additional unit. Efficiency of a farm can be lowered by agreements between the owner and the renter of a farm. The costs, or at least the direct variable costs, for each particular crop must be shared as the crop is shared. “Logic indicates that tenants cannot afford to farm as intensely as owner-operators when they pay all of the variable costs and receive only part of the product.