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The economics behind bale grazing

Grazing with Steve Kenyon

I started bale grazing in 1999 and have had many producers over the years thank me for sharing my bale grazing information with them. The usual comment is that they will never go back to the traditional method of feeding cattle. For me, bale grazing was a no-brainer once I looked at the cost savings.

I want to look at the economics today, but let’s first define bale grazing. There are a few different ways to bale graze; however, the key to any type of feeding is to reduce the yardage cost. Waste is usually such a small cost compared to yardage. Yardage costs can be a lot harder to see than the visible “waste” that’s left behind by the cows.

Some years, I place most of my winter supply of hay across a pasture in the fall like a checkerboard. The truckers deliver it right out onto my pasture and I only have to spread the bales out across the paddock. I calculate out for the number of cows and the pounds per day and the number of days required and try to put that many bales per row.  The twine is removed in the fall when the weather is nice and the twine is not frozen. I then ration off a four- or five-day supply of feed using an electric wire for the entire winter. I am providing stored hay to the cattle but I am strip grazing them through the paddock. Some would argue that bale grazing is not really grazing. You can decide after you have finished reading this.

Other years it works out best for me to purchase hay from a local producer who is willing to deliver the hay with their own tractor and wagon. I pay them to deliver it, but instead of stacking it in a hay yard, they unload out in my pasture for me. With this method, I never touch the bales with a piece of equipment. I usually get them to place a five-day supply of bales in each paddock on end. They are placed on end because in the wintertime, the twines are a bit easier to pull when frozen with ice on them than if they were placed on their sides. The neighbour will usually deliver once a month or whenever it is convenient for them. They just keep moving across the paddocks that we have already grazed to spread the fertility. If I can use five or six paddocks, I can have quite a few weeks worth of feed delivered at a time.

Let’s look at the economics now. There are two types of costs when feeding livestock. The first is the actual cost of the feed (hay and delivery) and the second is the yardage costs. Yardage is the labour and equipment costs that occur in the act of feeding  (time, fuel, repairs, depreciation and opportunity costs).

I look at things a little differently than what a lot of people teach. The market sets the price for the hay and it may change from year to year. Most people would call this a variable cost, but I disagree. I can’t control it, so I believe that cost to be fixed. I cannot control this and have to pay market value. Yardage is usually considered a fixed cost in most teachings, yet I have the ability to change it! So to me this is my variable cost. I don’t mean to confuse things but I want to prove a point. Just because someone calls it a fixed cost does not mean that you cannot change it on your farm. You can control your yardage.

I’ve spent years trying to figure out how to reduce my yardage costs. I am usually under 10 cents per cow per day with bale grazing. According to the statistics, the average yardage on an Alberta farm is about 70 cents/head/day. Yardage is traditionally quite complicated to figure out because a lot of your business overhead costs should be included — fuel, repairs, etc. To simplify yardage, I charge out my equipment at a reasonable hourly rate of $75/hour. That should cover all of the fuel, repairs, labour, depreciation and opportunity costs associated with that equipment. Let’s say you have 120 head and it takes one hour a day to feed them. One hour at $75/hour divided by 120 head gives you a yardage cost of $0.63/head/day  (remember the average in Alberta is $0.70).  Now add in the $1.25 for feed costs, (plus or minus depending on that crazy fixed/variable cost dictated by your market) and you end up with $1.88/head/day.

Be honest with yourself. Time yourself from the time you turn the key to when you turn it off again. The true cost of feeding includes both your feed costs and your yardage costs. Throw in your numbers and see what you get.

Now with bale grazing, I have the bales delivered right to the field. If I place bales with my bale truck at 100 bales/hour ($75/100 = $0.75/bale), I hire students to pull twine at 35 bales/hour ($15/35 = $0.43/bale) and I need to feed three bales a day (120 cows x 35 lbs./day = 4,200 lbs./1,400 lbs. bales = 3 bales/day. I also spend about two hours a week moving electric fence. In a week I need to feed 21 bales so two hours x $25/21 bales = $2.38/bale. A total of $3.56/bale x 3 bales a day/120 cows. Total yardage of $0.09/head per day, $1.25 for the feed plus $0.09 gives me $1.34. The more cows I feed, the lower this yardage can get. Is that as clear as mud?

The biggest concern for most producers is the thought of all of that wasted feed; however, when fed in the right spot, it is not a waste at all. And once you have had some practice and get better at bale grazing there’s very little “waste” anyway. No more than using a bale ring. At Greener Pastures, every day that a dry cow is bale grazed with imported feed, I charge out $0.30/head/day in fertilizer costs to my grazing profit centre, payable to my feeding profit centre. That is the fertilizer value that I calculated benefits my pastures.

So is my feed cost $0.30 cheaper than I think  ($1.25 – $0.30 = $0.95/head/day plus yardage)? You decide. I have seen the pasture improvement. I have seen the production of a paddock covered by bale grazing more than double the following year compared to an non-bale grazed paddock. And that improvement continues on for years.

Let’s look at the “waste.” I want to leave some  feed on the ground. That is the whole point, as I want to give the pasture extra water-holding capacity and added nutrients. Water is by far the most limiting nutrient that our soils need. This is the big benefit that bale grazing can provide to your pastures. For the $0.54 I can save on yardage, I can waste a lot of feed and still be ahead economically. Even if I waste 15 per cent of the bale (which I think is quite high), that only costs me about $0.20 cents/head/day in waste. (1,300 lbs. x 15% = 195 lbs. x 3 bales = 585 lbs. at $0.04/lb. = $23.40 divided by 120 cows = $0.20/head/day.)

But that $0.20 is fertilizer for the next five to 10 years (and does not include all the manure and urine that is also added to the soil). This is assuming we waste no feed with our alternative method of feeding, something that we all know is not at all the case. Let’s see, 120 cows at $0.30/head/day for 200 days equals $7,200 worth of fertilizer value. For Free. Multiply that by at least five years and you have $36,000 worth of fertility added to your pastures. It was only a management decision that caused it. Like I said, a no-brainer!

About the author

Contributor

Steve Kenyon runs Greener Pastures Ranching Ltd. in Busby, Alta., www.greenerpasturesranching.com, or call 780-307-6500.

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