title: Economic Analysis of Long-Term Management Strategies for Two Sizes of Utah Cattle Ranches
Creators: name: Banner, Roger E.
Publisher: name: Utah State University
Year: 1981

description: Utah cattle ranchers realize relatively little profit from ranch ownership and management. This study represents an attempt to identify ranch management strategies that produce more profit over time than do conventional strategies. To identify optimum management strategies for the long term, analyses of ranches under both normal and adverse ranch operation conditions using the COPLAN linear programming model were made for strategy comparison. To depict these ranch business environmental conditions, production levels were estimated from available biological data and price levels were estimated by indexing 1977 ranch product prices (the most current budget data available for Utah). The variability of strategy expected net returns above variable costs over a defined array of ranch operation conditions was estimated to evaluate income stability for each strategy. Overall profitability comparisons were made among strategies for evaluation in the context of ranch ownership and management. Percent returns on owned ranch capital were estimated as the basis for this comparison. Optimum strategies based on various ranch operation conditions for a large Utah cattle ranch were similar, as were optimum strategies based on the same conditions for a small Utah cattle ranch. Availability of winter/spring forage should be the principal constraint limiting cow-herd size based on the analyses. Range improvement practices that reduce the winter/spring range forage bottleneck are economically feasible in general, however, such practices must be evaluated on a site-specific basis. Optimum strategies for both large and small ranches focused on: 1) intensively managed cow/yearling enterprises at herd levels corresponding to levels of available winter/spring forage, 2) intensively managed crop production enterprises based on sale of crops, and 3) yearling stocker steer enterprises based on seasonal forage surplus. The economic analyses showed that alternative (optimum) management strategies could increase profit over conventional strategies dramatically. Optimum strategies for the large ranch produced net returns above variable costs many times greater than those produced by the strategy employed in 1977. Expected net returns above variable costs that resulted from small ranch optimum strategies were vastly superior to those produced by the 1977 strategy. Working capital requirement increased approximately 50 percent over levels required by strategies employed in 1977 for both large and small ranch optimum strategies. Expected income variances and standard deviations were greater for both large and small ranch optimum strategies than for strategies practiced in 1977; however, income standard deviations expressed as percentages of strategy expected values (relative income variabilities) were much less. Percent returns on owned ranch capital expected from the practice of optimum strategies were eight times greater than percent returns from practice of the 1977 strategy for the large Utah cattle ranch and six times greater than those resulting from employment of the 1977 small ranch strategy.