Social and Economic Influences on Grazing Management
J. R. Conner
Economics and Grazing Management
- The Effect of Number of Animals on Economic Goals
- The Effects of Species and Class of Animals on Economic Goals
- Effects of Spatial Distribution of Livestock on Economic Goals
- Effects of Temporal Distribution of Animals on Economic Goals
- Effects of Grazing System on Economic Goals
Land Ownership and Grazing Management
- Grazing Management on Privately Owned Land
- Grazing Management on Publicly Owned Land
List of Figures and Tables
Grazing management is defined as the manipulation of livestock to accomplish a desired result (So. Range Manage. 1974). The desired result varies however as a function of many social factors of which economics is usually dominant. The objective of this chapter is to examine the impact that social factors in general, and economics in particular, have on the adoption of various grazing management strategies and tactics.
Societal goals vary widely as a function of a multitude of factors. This variation in goals is related to the variation among societies in the goals of each individual. Maslow (1954) argues that there is a basic ordering or hierarchy of psychological needs or goals common to all humans (Figure 9.1). In this conceptual model, biological survival is the most basic goal and spiritual tranquillity the most advanced goal. The basic thesis presented by Maslow is that the attainment of higher goals is only attempted after the more basic goals have been met. For example, in primitive societies, with relatively unsophisticated institutions and technologies, man's predominate focus is on achieving individual and/or group survival. However, in highly developed societies with sophisticated institutions and technologies, man's biological survival becomes more certain and its place as his predominate goal is overtaken by needs for financial security, social prominence and intellectual stimulation.
The resulting effect of this variation in societal goals is that grazing management strategies also vary since man's culture and the knowledge base embodied in it affects how he uses ecosystems to accomplish goals. Lack of sophisticated institutions and technologies dictate an opportunistic approach to ecosystem use. Thus migratory herding is characteristically the primary grazing management practice utilized in primitive societies. But as sophisticated institutions are established and expanded knowledge bases developed, more complex livestock production practices are adopted such as those incorporating use of supplemental feeds and cultivated forages, feed grains in finishing yards and grazing systems. This added complexity is necessary because the more intricate underlying institutions, such as property rights, restrict the practices such as migratory herding. This increased complexity is also a reflection of man's expanded knowledge base and his focus on higher goals.
Unfortunately, however, the functional aspects of grazed ecosystems remain constant regardless of social and economic factors. The ecological principals, which for example, regulate the rate and extent of deterioration in ecological condition class (Chapter 5), are functionally constant regardless of whether over-grazing occurs in a primitive or sophisticated society. The consequences to man, however, are quite different in the two societal complexities in that ecological imbalances in primitive societies are frequently corrected only through the death of beast and/or man whereas in more developed societies corrections are most commonly reached through economic convulsions. In other words, man is better able to survive temporary ecological imbalances in the more developed societies thanks to the existence of more sophisticated institutions and technology and man's suffering is expressed in the form of financial losses and reduced social status and self esteem.
Economics and Grazing Management
Economics is the study of how humans, individually and collectively, use scarce resources to satisfy their wants and needs (goals) (Robbins 1932, Samuelson 1964, Ferguson 1966). Resources, in this context, are the things we use to accomplish our goals and objectives. In this book, the resources of primary interest are grazing land ecosystems used for livestock and wildlife production. Because the primary goals in most sophisticated societies are related to economics, and because livestock/wildlife production in these ecosystems vary primarily as a function of the temporal and spatial distribution of various kinds and numbers of livestock (Chapter 6), an understanding of the potential economic impact of these four grazing tactics is critical.
Stocking rate (number of animals) is the major factor affecting the potential magnitude of profits realized by a ranching enterprise. The importance of stocking stems from the relationships presented in Figure 7.2 and Figure 7.3 which show that as stocking rate is increased, production/individual animal decreases while production/unit-area of land increases to some maximum and then declines. Because of these basic relationships the incentive to maintain high stocking rates as a means of achieving financial goals is tremendous. However, because of temporal and spatial variation in quantity and quality of forage produced in rangeland environments, the optimal rates of stocking required to continually maximize production/unit-area of land varies. Moreover, this variation is acutely reflected in terms of profits because at high rates of stocking production costs generally increase at at somewhat faster rate than the rate of increase in gross returns. Thus, as stocking rate is increased beyond a moderate level, profit levels begin to decline (Figure 9.2). Moreover, this reduction in profits reduces rate of increase in net worth and increases the probability of encountering a catastrophic loss.
These concepts have been adequately demonstrated from studies at the Texas Experimental Ranch as presented in Figure 6.2 and Figure 6.3. During the period from 1982 through 1987, average residual returns (i.e. net returns to land, management and profit)/cow from yearlong continuous grazing stocked at moderate and heavy rates were about $70 and $61, respectively, while average net returns/hectare were $11 and $13, respectively (Heitschmidt et al. 1989). However, returns/cow over the 6-year period ranged from about $14 to $109 in the moderately stocked treatment and from about $-18 to $96 in the heavily stocked treatment while net returns/hectare ranged from $12 to $17 and from $-3 to $21, respectively. These data revealed two important points:
Species and classes of grazing animals also affect a rancher's ability to meet financial goals because annual profits may be enhanced by selecting a species or class of grazing animal that can most efficiently utilize the particular forage available (Chapter 2). For example, if browse makes up a large component of the forage base, the rancher might be able to safely stock more animal units of goats than cattle/unit area because goats utilize browse more efficiently than cattle. Often, particularly if the forage base is diverse, a combination of two or more types of grazing animals can utilize the forage more efficiently than a single species. In this case, the total animal units/unit area can be increased with a combination of livestock over the number of animal units that could safely be stocked with either species alone.
Combinations of livestock may also enhance a rancher's ability to avoid catastrophic losses because the probability of simultaneously suffering economic losses in any given year in two or more diverse enterprises is usually much less than the probability of experiencing losses in any given year for a single enterprise. This risk management strategy, known as investment diversification, has long been an accepted business practice.
Choosing an alternative class or species of grazing animal, or a combination of grazing animals, is often difficult because of differences in production requirements, costs and product prices associated with the different animals. Fences, for example, that may be well suited for cattle production may be totally inadequate for goats. In this case, changing from a single cattle enterprise to a goat enterprise or a combination of cattle and goats requires a significant increase in fencing costs which might more than off-set any gains in income resulting from the more efficient utilization of the forage base.
The effects of spatial distribution of livestock on profits and risk avoidance are difficult to assess because the potential impact varies tremendously among enterprises. Although it is well known that an increase in livestock production can be attained through enhanced livestock distributional patterns (Chapter 6), increased costs may limit or totally eliminate profit potentials. Major cost factors include fencing, water development, and labor. These costs are further confounded because labor costs may either increase or decrease over time as a function of the specific situation. Labor savings may be realized as a result of enhanced livestock gathering and supplemental feeding regimes whereas labor costs may increase as a result of increased time spent gathering and feeding livestock due to a greater number of herds.
Temporal distribution of animals can have a dramatic effect on a rancher's ability to increase profits and ultimately, increase net worth and reduce risk. For example, Launchbough (1986) reports net returns/hectare increased two-fold when an intensive early stocking (IES) strategy was used in place of a season-long grazing (SLG) strategy (see Chapter 6). At normal rates of stocking, net returns/hectare over a 4-year period from SLG (May 1-October 1) averaged $20.54 while returns/hectare from IES (May 1-July 16) averaged $21.31 (normal stocking rate), $41.87 (double normal stocking rate) and $46.62 (triple normal stocking rate). Major cost savings were related to death losses, health costs, fuel and repairs, mineral supplements and interest.
In terms of variation in net returns among years, there was little difference between the two normal stocked treatments as net returns/hectare ranged from $7.14 to $32.41 in the SLG and from $8.64 to $35.59 in the IES treatment. However, as stocking rate was increased variation in returns increased also. Net returns/hectare ranged from $19.22 to $67.28 at the 2X rate of stocking and from $14.36 to $78.42 at the 3X rate of stocking. Thus, based on these data, risk avoidance was greatest in the double normal stocking rate IES treatment (minimum return equals $19.22) and least in the normal stocking rate SLG treatment (minimum return equals $7.14). From this example it can be seen that profits and risk avoidance were both increased through a temporal shift in grazing. But it is important to note that the positive response was related in part to temporal patterns of forage growth in that rate of forage production in this region is consistently greatest in spring and early summer (Sims and Singh 1978). A major factor affecting the relative success of any grazing strategy used in rangeland environments must be related to climatic rainfall patterns particularly with regards to the temporal distribution of animals.
It should also be noted that the use of such practices as IES are closely tied to rancher's goals other than strict economic gains. For example, IES would most likely not be an acceptable practice for a rancher who prefers to operate a cow/calf enterprise. In this instance, the difference in profits and risk avoidance between stocker IES and cow/calf yearlong grazing enterprises can be viewed as a cost to the rancher to run the enterprise of his choice. For example, if a rancher continues to operate a cow/calf enterprise although he could realize a $5/hectare greater profit with a stocker IES strategy, the cost of this personal preference is $5/hectare.
The effects of any given grazing system on the attainment of economic goals is complex and difficult to assess. The complexity arises because there is essentially an infinite number of grazing systems and their effects on economic goals vary as a function of current numbers and configuration of pastures, labor constraints, managerial ability and personal preference. Moreover, implementation of a grazing system generally involves certain time constraints because the primary justification for the establishment of all grazing systems is related to their effect on range condition. Thus, a grazing system may be viewed by the rancher as a tool contributing to the goal of sustained growth in profits and net worth over time as garnered through improved ecological condition and range productivity. To the extent that a grazing system allows for maintenance of range condition with higher stocking rates than would otherwise be possible, it may be viewed by the rancher as contributing to his goal of maximizing annual profits.
The rancher's decision regarding the establishment of a grazing system hinges on the tradeoff between the benefits he expects to gain in the form of current or future carrying capacity and the costs of additional fences, water facilities and operating labor required to implement and maintain the grazing system. Like most other decisions the rancher makes, the optimal combination of pasture size, length of rest or deferment period and stocking rate is unique to his individual goal hierarchy and set of resources. In addition, since his goals and resources are likely to change through time, so will his optimal grazing strategy.
Generalities based on economic contrasts between grazing systems are difficult to formulate because of the presence of confounding factors such as differences in fencing, development of water and working facilities, labor costs, costs of destocking and restocking, managerial ability, etc. For example, (Heitschmidt et al. 1989) contrasted economic returns from 1982 through 1987 from cow/calf performance in heavily (HC) and moderately (MC) stocked year-long continuous grazing treatments (see stocking rate section), a moderately stocked 4-pasture, 3-herd deferred rotation (DR) system and a very heavily stocked 16 paddock, 1-herd rotational grazing system (RG). Net returns/hectare over the 6 years averaged about $13, $11, $16 and $16, respectively, for the HC, MC, DR and RG treatments. Range in returns was from about $-3 to $21 in the HC treatment, $2 to $17 in the MC treatment, $9 to $22 in the DR treatment and from $5 to $20 in the RG treatment. The analyses were based on the assumption that annual labor, fuel, and equipment costs were equal among treatments. These assumptions were made so as to reduce the level of specificity to the research location. Based on these analyses, it was concluded that profit potential was greatest in the DR and RG treatments and risk avoidance was greatest in the DR treatment.
Land Ownership and Grazing Management
In most modern capitalistic societies, the resource owner may use the resource to satisfy his or her own goals. In most of these societies land is either owned by individual citizens, business firms or organizations; i.e., privately owned; or it belongs to a societal group such as a state or the nation; i.e., publicly owned. Thus, if the land is privately owned it may be used, with few restrictions, as its owner wishes to satisfy his or her goals and objectives. If it is publicly owned, the land must be used to satisfy the goals of society.
Most agricultural land in modern societies is used in the production of marketable products. In areas where climatic, topographic and/or soil characteristics, or desires of the owner, render the land unsuited for cultivation, it is used to produce livestock and/or wildlife and related products through grazing. These livestock/wildlife production operations, commonly called ranches, are generally operated as businesses. In the ranching business the forage grown on the land supplies a significant portion, if not all, of the feed for the animals. The grazing land and animals are used in conjunction with labor, capital, management expertise, etc. to induce animal reproduction and/or growth which can be sold for currency. The currency can then be used to maintain and/or replace the resources used in the production process and provide income to the rancher which he can then use to meet his personal goals.
But management goals and objectives vary among ranching enterprises as a result of numerous social and economic factors. Still, in the context of a business firm, ranches included, the major goal is continuous survival of the business enterprise. If this goal is achieved, then the rancher is assured of achieving at least some of his nonfinancial goals such as maintaining his chosen occupation and life style (spiritual tranquillity) (Conner, 1984). Survival as a business generally requires that other supportive goals also be achieved. That is, to survive the ranch must produce a profit in most years and in years when losses occur, they must not be of sufficient magnitude to eliminate the ranch owner's net worth. Over the long term then, the goal of firm survival requires that the rancher also achieve the goals of obtaining profits and avoiding catastrophic losses.
To insure that these goals are achieved most ranchers adopt yet another supportive goal; i.e., sustained growth in profits and net worth over time because these goals provide an ever increasing cushion or margin of safety against business failure due to catastrophic losses. Attainment of these goals also insures the rancher's standard of living will improve as well as his retirement security and/or his families' inheritance.
A rancher attempts to meet his goals by managing the set of resources that are available to him. He accomplishes this by selecting a set of livestock production enterprises and grazing strategies that he believes will provide him with the best opportunity to meet his goals.
In summary, it can be seen that a rancher's goals in a developed society generally relate to long-term security, self-esteem and spiritual tranquillity (Figure 8.1) and that the level of economic profits attained from various grazing management tactics is a major factor affecting goal achievement. Thus, a fundamental knowledge of the potential impact of the four broad principles of grazing management (see Chapter 6) on economic profits is essential.
A frequently stated goal of most modern societies is to maintain and/or improve the general welfare of its citizens. The problem with this goal is that it masks the problem of establishing the "correct" ordering of secondary goals that contribute to improvement in the general welfare and avoids the issue of how the welfare is distributed among the individual and subgroups of citizens making up the society. In the final analysis, the ordering or ranking of society's goals, and the allocation of resource to meet them, is accomplished through the political processes and institutions that the society has established. Whether they are equitable and/or efficient is beyond the scope of this volume.
Why would a modern capitalistic society choose public ownership of a part of its land? Would not a capitalistic society encourage private ownership of productive resources? The answer is yes, private ownership would be preferred unless, through public control, the society can achieve goals that could not be achieved, or that would be achieved less efficiently, if the land were privately owned.
And what are these goals that can be best achieved through public ownership of land? The goals most often cited as justification for public ownership include conservation of natural resources, preservation of environmentally unique and/or fragile areas and providing opportunities for present and future citizens of the society to observe and enjoy unique wildlife and "natural" areas. Public ownership is necessary to achieve these goals because, if the areas were privately owned, the resources (rangeland) would be subject to ecological deterioration through use in the production of readily marketable goods and/or services.
Goals relating to preservation of resources for the enjoyment of future generations are particularly hard to achieve under private ownership since the current private owners have no way of marketing the service they are expected to provide to future generations. Thus, a private owner uses the land to produce a product or service for which current markets exist, even if the process results in irreversible degradation of the resource.
Most publicly owned land is capable of supporting more than one use goal, some of which are not mutually exclusive, but all of which will be held as "most important" by some of the different individuals and groups in the society. Thus, the government agencies charged with the responsibility of allocating public lands among these different possible uses must constantly reevaluate the "correctness" of their allocations relative to the equity among different interest groups and the efficiency of the land in its different uses.
One traditional use of a large portion of publicly owned land throughout the world is to furnish forage for privately owned livestock through grazing. In the absence of government regulation, the grazing land is often abused by overgrazing which results from each livestock owner trying to maximize his use of the land. In such cases, herd owners are provided no incentive to conserve forage for future use and/or range improvement because forage not used by one individual's herd will likely be used by another's.
In some cultures, this problem is exacerbated by the individual herd owner's primary goal being the maximization of herd size. In these instances, the owner is willing to sacrifice production per animal and sometimes total herd production of meat or milk because to him numbers of animals are more important than quality or total herd production.
This type of use of publicly owned land might be well suited for primitive societies where individuals are free to migrate with their herds over vast areas. Also, in primitive societies, over-use problems are usually resolved by war or starvation which reduces numbers to levels that the land can support. In more developed societies, when the public land is more limited and bounded by privately owned land, unregulated use of public land by private herd owners usually results in land abuse and degradation. The remedy for this problem is either privatization of the land or government regulation which restricts the number and/or time period that livestock can be grazed on a given area.
One way of regulating grazing is by issuing "grazing permits". Most public land on which grazing permits are issued has other simultaneous uses, otherwise, society's interest would be better served by selling the land into private ownership. Most commonly, the "other uses" include providing habitat for wildlife which in turn provide recreational and aesthetic benefits to members of society other than ranchers. Thus, the government agencies charged with allocating the land among its alternative uses must carefully regulate the grazing use so that it does not impinge on, or unduly interfere with, the other uses.
The execution of this task is a constant source of concern to ranchers, agency personnel and others interested in public grazing because there are inevitable use conflicts; particularly on the more productive range sites like riparian areas. Riparian areas are sources of lush vegetation and drinking water for livestock; thus enticing the livestock to utilize these sites more frequently than more arid sites. These same areas, however, are also critical hunting, breeding, nesting, and feeding grounds for wildlife; critical areas for stream bank erosion and silting and important fisheries. Excluding livestock entirely from riparian areas in many cases reduces the value of the rangeland for grazing to the point that it is not worth the fee that the rancher must pay for the permit. On the other hand, restricting the use of riparian areas by livestock to selected specific sites requires fencing which is expensive and detracts from the recreational and aesthetic benefits that can be derived from the area. In addition, overgrazing and erosion problems are usually intensified for the specified livestock use areas because of the increased concentration of livestock on the smaller areas.
Grazing management problems on public lands are not, however, restricted to those related to leased livestock grazing permits. Wildlife and feral horse and burro populations are generally protected and encouraged to increase on most publicly owned rangelands. In many instances the populations of these wild animals have increased to the point that their forage demand has exceeded what the area can supply. To prevent deterioration in the ecological trend of the rangeland and/or starvation of part of the wild animals, the managing agencies have had to resort to reducing the number of the wild animals through hunting and/or capturing and relocating them to new areas with less grazing pressure.
The ecological aspects of a grazed ecosystem are functionally constant regardless of the socio-cultural aspects of the human population interacting with it. Thus, regardless of how sophisticated his society, manipulation of temporal and spatial distribution and kinds and numbers of grazing animals are the only means by which man to can manage grazing land to achieve his desired goals.
The roles that grazing management plays in the use of grazing land to achieve goals depend on whether the land is privately or publicly owned. Privately owned rangeland is principally used as a resource in a productive process. The purpose of the productive process is to help the land owner achieve goals such as firm survival which in turn usually requires achieving profits and avoiding catastrophic losses. Grazing management, in this case, generally consists of striving to balance the desire for maximum annual profits/unit area with the necessity of leaving some reserve forage for emergency use and allowing for improvement in the productive potential of the rangeland. This role of grazing management is, however, often complicated through social and institutional influences on the use of privately owned rangeland.
Publicly owned grazing land is characterized by its intended role in meeting non-market goals of conservation, preservation and equity of opportunity to enjoy unique recreational and aesthetic experiences. The role of grazing management is expanded to include facilitating many simultaneous but different land uses and users and usually amounts to keeping livestock from damaging the resource or from impinging on the other uses and users.
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Figure 9.1 Hierarchy of man's needs (goals) adapted from Maslow (1954).
Figure 9.2 Relationship between production/animal, production /unit area of land, profit/unit area and animal numbers/unit area.