Choice of Adaptation Strategies in Extreme Weather Events: A Case Canadian Prairie Beef Farms Santosh Poudel and S. N. Kulshreshtha Department of BPBE University of Saskatchewan 22nd Annual Farming for…. Profit? Moose Jaw Conference June 21-22, Moose Jaw

Outline Background of the study Beef production in Canada and the Prairie Common drought coping strategy of beef farm Methodologies Results Summary and conclusion

1. Background Economic impact of extreme events such as longer duration drought on beef operation is expected to be significant due to its impact on beef feed production. Impact of such events on farm management and longer term farm financial situation is relatively unsearched in Canadian prairie.

Livestock production was adversely affected 1987-1988 drought; effects on feed, and the lack of suitable pasture land due to drought (IISD, 1997). 2001 and 2002 Canadian Prairie drought widespread scarcity of feed and water. Livestock inventories sharply decreased (AAFC, 2013)

Warmer prairie with more extreme droughts are projected in the future (Zhang et al., 2000; Khandekar, 2004; Barrow et al., 2009; Price et al.,2011; Bonsal et al., 2012; Paimazumdar et al., 2013) Impact on beef could be more severe due to the feed and water shortages especially if the drought lasts for longer period in the future. Two beef farms: one in Swift Current and another in Pincher Creek were modelled in this study.

2. Beef production in Canada and the Prairie Largest single commodity source of farm cash income. Average 2001 to 2010 period was 15.4%. The highest in 1977, 24% Figure 1: Contribution of cattle to Canadian cash farm income, 1971-2010. Source: Kulshreshtha (2012)

Beef production in Canada and the Prairie Table 1: Share of cattle sector to Canadian farm cash income by province, Canada, 2011 Province Level of Farm Cash Income from Cattle and Calves (Million $) % of Total Canadian Cash farm Income Newfoundland and Labrador 3 0.05 Prince Edward Island 21.6 0.33 Nova Scotia 23.7 0.37 New Brunswick 24.3 0.38 Quebec 514.2 7.97 Ontario 1028.3 15.95 Manitoba 421.4 6.53 Saskatchewan 1039.2 16.11 Alberta 3167.3 49.11 British Columbia 206 3.19 Canada 6449 99.99 Source: Kulshreshtha (2012)

Beef production in Canada and the Prairie About 42% of total farm in Alberta and 27% of total farm in Saskatchewan reported to have beef cattle in 2006 (Statistics Canada, 2006). Figure 2: Number of Farm reporting beef cattle operation in Saskatchewan and Alberta at July 1st, 1995-2014. Source: AAFC (2014)

Beef production in Canada and the Prairie Figure 3: Number of beef head in Saskatchewan at July 1st, 1995-2014. Source: AAFC (2014)

Beef production in Canada and the Prairie Figure 4: Number of beef head in Alberta at July 1st, 1995-2014. Source: AAFC (2014)

Beef production in Canada and the Prairie Table 2: Beef farm and number of head in study sites Animal type Pincher Creek (Div 3) Swift Current (Div 8) 2011 2006 Steer for slaughter   # farms 430 495 254 370 # animal 53,057 55,847 8,423 13,047 Average (#/farm) 123 113 33 35 Heifers for slaughter    # of farms 286 326 159 206 # Animal 54,864 43,623 7,519 9,777 192 134 47 Beef cows 953 1,166 721 983 112,027 123,338 66,624 81,692 118 106 92 83 Source: Statistics Canada (2011)

3. Common drought coping strategies of beef farm Bastian et al. (2006) reported common coping strategies as Purchasing additional feed for livestock Livestock herd liquidation Management alternatives like early weaning of calves, and addition of alternative crop and livestock enterprises Ritten et al. (2011) recommended two approaches: Purchasing additional feed, and Reducing feed demand of the herd either by management or by reducing herd size.

Common drought coping strategies of beef farm OMAFRA (2012) advises three options of dealing with feed shortages; moving livestock where abundant feed and forages available, buying feed, and culling herd. SMA (2008), AARD (2014c) and interview of mixed crop beef farmers suggested the feed management, changes in timing of herd operations, and reduction in herd size

4. Methodologies 4.1. Study Farms Statistics Canada (2011) customized mixed farm data are used to create a synthetic farm for the study. Representative Pincher Creek Farm: 307 beef herd (100 cow, 88 calves, 16 replacement heifer, 6 bulls, 97 finishers); 1700 acre native mixed pasture, 686 acre crop area including hay, Representative Swift Current Farm: 197 beef herd (86 cow, 74 calves, 13 replacement heifer, 4 bulls, 21 finishers); 1500 acre native mixed pasture, 1057 acre crop area including hay,

4.2 Overview of the methodological framework Figure 5: Single year static overview of the simulation model

4.3 Scope of the simulation model Base scenario is 30 years period of 1971-2000 and future scenario is 2041-2070 Crops and forage productivity under given climate and inputs are simulated by crop and forage models respectively. Climate variable doesn’t enter the simulation directly. All the coefficients to run beef herd model like herd activity, nutrient demand, timing of operations are adopted from real world observations Crops, forage, beef and price models are estimated separately and output of each models enters as input in the whole farm simulation model.

4.4 Adaptation measures tested 1) Farmer feed the inventory grain and forages and purchase additional feed if necessary, without any changes in management. – PURCHASE FEED-Reference case 2) Farmer try to reduce total feed demand of the herd by changing timing of beef herd operation like early weaning of calves and early sell of open cows and slaughter animals, and – CHANGES IN MGMT 3) Cull herd decision starting from open cows to exactly match the reduced feed supply due to extreme weather events. –CULL HERD

4.5 Pasture productivity estimation (Method adopted from Dr Jeff Thorpe, SRC)

Pasture productivity estimation (Method adopted from Dr Jeff Thorpe, SRC)

5. Simulation results 5.1 Gross Margin (GM) calculation Table 3: Return from beef activities Adaptions Pincher Creek Swift Current Base Scenario GM (PV,$) Average ($/year) CV Purchase feed 633,861.12 45,747.89 0.36 395,067.86 29,539.28 0.56 Changes in mgmt 416,233.53 31,072.21 0.64 247,472.93 19,128.00 0.98 Cull herd 527,979.65 38,696.80 0.47 265,380.35 20,394.38 0.95 Future Scenario   950,980.23 67,326.62 0.29 553,691.52 44,493.04 0.60 527,965.36 41,438.70 0.67 216,596.35 21,577.52 1.27 658,355.89 46,214.60 0.57 64,987.85 5,263.07 4.05

5.2 Choice of adaptation measures Table 4: Comparison of adaptation options, Pincher Creek Alberta (Purchase feed as reference) Changes  Profitability   Liquidity Net worth Beef activities (GM) Crop activities (GM) Farm level (GM and NPV) Cash flow (Farm and family) Baseline scenario Changes under "changes in mgmt" Negative Positive Changes under "Cull herd" Small Positive Future scenario

Table 5: Comparison of adaptation options, Swift Current (Purchase feed as reference) Changes  Profitability   Liquidity Net worth Beef activities (GM) Crop activities (GM) Farm level (GM and NPV) Cash flow (Farm and family) Baseline scenario Changes under “Changes in mgmt" Negative Positive Changes under "Cull herd" Small Positive Future scenario Changes under "Cull herd”

Table 6: Return to drought feeding Baseline   Pincher Creek Saskatchewan Cost/Return ($) % return over cost Cost of drought feeding 45,327.23 Return to feeding 105,881.47 233.59 129,687.52 286.11 Future 17,351.61 283,001.68 1,630.98 464,174.87 2,675.11

6. Summary and Conclusions Maintaining herd size without compromise on feeding is identified as superior to other alternatives in managing beef herd Limit feeding options to manage beef feed deficit severely impact herd output and cull herd strategy negatively impacts long term productivity potential.

7. Summary and Conclusions Due to negligible impact on pasture productivity in the Pincher creek, impact of extreme event would not be much severe in the future. Impact on Swift Current would be sever due to relatively significant impact on pasture production. Negative impact of extreme events in the future would be diluted by the positive gain in the future given the appropriate choice of drought coping strategies are followed.

Thank You