Integrated Crop-Livestock Production Systems John Lawrence Iowa State University Extension Livestock Economist

Overview of Iowa Livestock #1 in production of Hogs Eggs Pork processing #5 in cattle feeding #10 in turkeys #11 in beef cows #12 in milk production

Overview of Iowa Livestock #1 in production of Corn Soybeans Used in animal agriculture in Iowa Over one-third of the corn Over one-fourth of the soybeans Grain surplus in all but 1-2 counties Ample land for manure application

Diversified v. Specialized Iowa 1980 – 2001 Number of farms -22% Average acres per farm +23% Hog producing farms 1980 over 53% of farms 2002 only 11% of farms

Stochastic Budget Analysis Cash grain v. diversified grain-hog farm Farrow to finish Breed to wean Wean to finish

Stochastic Budget Analysis 6000 hours of labor per year No seasonal labor constraint Corn production = corn demand Corn acres = soybean acres Manure applied ahead of corn Tractors shared between crop and hogs

Cash Grain v. Hog-Grain Farms With 6000 Hours of Labor per Year Enterprise Acres Sows Hogs Sold Cash Grain 2378 Farrow-Finish w/G 550 191 3,270 Breed - Wean w/G 229 616 12,200 Wean - Finish w/G 723 5,963

Net Return to Labor and Management Excluding Government Payments ($/yr) 6000 Hours per Year   Mean Std Dev 90% Interval Cash Grain 18,414 124,520 -164,984 226,791 F-F w/G 78,807 73,283 -29,760 207,421 B-W w/G 91,555 68,697 -11,351 208,914 W-F w/G 55,492 90,643 -84,884 212,825

Return on Investment Excluding Government Payments 6000 Hours per Year   Mean Std Dev 90% Interval Cash Grain 3.80% 3.60% -1.50% 9.80% F-F w/G 4.50% 5.60% -4.00% 14.30% B-W w/G 4.80% 6.80% -5.50% 16.50% W-F w/G 2.60% 5.00% -5.30% 11.20%

Net Return to Labor and Management Including Government Payments ($/yr) 6000 Hours per Year   Mean Std Dev 90% Interval Cash Grain 127,564 81,819 56,591 285,458 F-F w/G 104,119 67,430 7,490 221,214 B-W w/G 102,079 66,344 4,085 216,494 W-F w/G 88,758 82,814 -30,681 236,775

Return on Investment Including Government Payments 6000 Hours per Year   Mean Std Dev 90% Interval Cash Grain 6.90% 2.40% 4.90% 11.50% F-F w/G 6.50% 5.10% -1.00% 15.40% B-W w/G 5.80% 6.60% -3.90% 17.10% W-F w/G 4.50% -2.20% 12.40%

Percent of Observations by Rank and that Beat Cash Grain Government Payments Included   Profitability Rank Beat Enterprise 1 2 3 4 Cash Grain Cash Grain 55% 8% 9% 28% F-F w/G 15% 44% 37% 4% 39% B-W w/G 20% 32% 31% 17% 38% W-F w/G 10% 16% 23% 51%

Source \\nt1_econ\data\share468\Lawrence\Data\LMIC Files\IMPEXP1.xls

Cash Grain v. Beef-Grain Farms With 6000 Hours of Labor per Year Yearling Steers Calf Steer Cow-Calf Cow-Finish Crop 1,141 866 22 232 Pasture - 1,103 829 Hay 84 123 191 174 Total 1,225 989 1,316 1,235 Cattle 1,405 1,102 441 605 Acres and Head

Cash Grain v. Dairy-Grain Farms With 6000 Hours of Labor per Year Acres and Head Dairy Pasture Dairy Crop 145 105 Pasture - 80 Hay 85 19 Silage 37 Total 266 204 Cattle 83 63

Summary Cost savings from diversification Less acres per person with livestock Impact of 2002 Farm Bill Without: cash grain was lowest average and highest risk With: cash grain is highest average and lowest risk

Future analysis Stochastic analysis of beef and dairy Include crop insurance Seasonal labor constraints Optimization programming with greater detail on production and price Inter-farm v. intra-farm optimization