• TABLE OF CONTENTS
HIDE
 Front Cover
 Acknowledgement
 Table of Contents
 Summary
 The problem and the area studi...
 Experiences in seeding cropland...
 Costs and returns of seeding cropland...
 Minimum yields of wheat needed...
 Comparison of net returns from...
 Influence of price on land use...
 Additional tables














Title: Economic possibilities of seeding wheatland to grass in eastern Colorado
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 Material Information
Title: Economic possibilities of seeding wheatland to grass in eastern Colorado
Series Title: Economic possibilities of seeding wheatland to grass in eastern Colorado
Physical Description: Book
Creator: Sitler, Harry G.
Publisher: U.S. Department of Agriculture
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Bibliographic ID: UF00080869
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Table of Contents
    Front Cover
        Page 1
        Page 2
    Acknowledgement
        Page 3
    Table of Contents
        Page 4
    Summary
        Page 5
        Page 6
    The problem and the area studied
        Page 7
        Page 8
        Page 9
        Page 10
    Experiences in seeding cropland to grass
        Page 11
        Page 12
        Page 13
        Page 14
    Costs and returns of seeding cropland to grass
        Page 15
        Page 16
        Page 17
        Page 18
    Minimum yields of wheat needed to cover costs
        Page 19
        Page 20
        Page 21
        Page 22
        Page 23
        Page 24
        Page 25
        Page 26
    Comparison of net returns from wheat and from grass - How much wheatland should be seeded to grass?
        Page 27
        Page 28
        Page 29
        Page 30
        Page 31
        Page 32
    Influence of price on land use and additional factors to be considered
        Page 33
        Page 34
        Page 35
        Page 36
    Additional tables
        Page 37
        Page 38
        Page 39
        Page 40
Full Text
ARS 43-64


go. o -/5


ftaa&e o


SEEDING


WHEATLAND


TO GRASS

IN EASTERN COLORADO
............ . *. *...... .



Agricultural Research Service
U. S. DEPARTMENT OF AGRICULTURE
in cooperation with the
Colorado Agricultural Experiment Station


b qj~I~i






-3-


ACKNOWLEDGMENTS

Experiment Station people and farmers gave their time and information
to make this study possible. Without their cooperation and patience the
study could not have been made.

Rex D. Rehnberg, Chief of the Economics Section, Colorado Agricul-
tural Experiment Station, and Warren R. Bailey of the Farm Economics
Research Division, Agricultural Research Service, directed and super-
vised the work. Acknowledgments are extended also to Peter Hildebrand,
who worked on farm budgets with the assistance of production specialists
of the Colorado Agricultural Experiment Station. John O. Early and
Erwin Ullrich, also of the Colorado Agricultural Experiment Station staff,
assisted in obtaining information from farmers; and Nan Paterson, Lab-
oratory Supervisor in Economics, summarized the farm schedules and
checked the calculations.





-4-


CONTENTS


Page

SUMMARY ............. ...... ..... ........................... 5

THE PROBLEM ...................................... ...... 7

THE AREA STUDIED ... ....................... ... ........ 7

EXPERIENCES IN SEEDING CROPLAND TO GRASS ........... 11

Farmers' Experiences ...................................... 11

Results of .Experiments .................................. 14

COSTS AND RETURNS OF SEEDING CROPLAND
TO GRASS. ................................... .. .. ... ..... 15

MINIMUM YIELDS OF WHEAT NEEDED TO
COVER COSTS .................. ............... ........... 19

COMPARISON OF NET RETURNS FROM WHEAT
AND FROM GRASS .................... .................... 27

HOW MUCH WHEATLAND SHOULD BE SEEDED
TO GRASS? .. ............................................. 27

INFLUENCE OF PRICE ON LAND USE ........................ 33

ADDITIONAL FACTORS TO BE CONSIDERED ................ 33

ADDITIONAL TABLES ........................................ 37


Washington, D. C.


February 1958






-5-


ECONOMIC POSSIBILITIES OF SEEDING WHEATLAND TO GRASS
IN EASTERN COLORADO

By

Harry G. Sitler, Agricultural Economist
Farm Economics Research Division
Agricultural Research Service

SUMMARY

The study reported here deals with the costs and returns of seeding
cropland to grass in the eastern Colorado wheat area north of the Arkan-
sas River. In this semiarid plains area, approximately two-fifths of the
land is under cultivation and three-fifths is in pasture. Since 1929, the
acreage of cultivated land here has increased from 2. 8 million to 4. 2
million acres.

Farmers have been more successful in establishing grass on sandy
than on heavy lands. Even so, a successful stand of grass is not always
obtained with one seeding. It is not unusual to reseed up to half of the
acreage that was first seeded 2 or 3 years earlier. After the grass is
fully established, farmers estimate that these pastures have about two-
thirds more carrying capacity during the first 10 years than adjoining
native pastures.

From 3 to 6 years are needed to obtain a usable stand of grass. Dur-
ing this period, expenses are relatively large and little or no income is
received from the land. To help meet the costs of seeding grass, the
Agricultural Conservation Program provides cost-share assistance aver-
aging about 50 percent of the costs with a limit of about $5 an acre for
approved practices. The Conservation-Reserve part of the Soil Bank
Program provides up to 80 percent of the costs and an annual payment
of up to $7 per acre for a period of 5 to 10 years, when the land is
seeded to grass under the program. Under the Soil Bank, however, land
cannot be grazed except under unusual circumstances, and then only by
permission of the Secretary of Agriculture.

As an illustration, net returns from a seeded pasture are calculated
through a 12-year period. No grazing is obtained during the first 3 -or
6 years, depending on whether 1 or 2 seedings are needed to obtain a
stand of grass. Yearling steers are used to stock the pasture after the
grass is established, and all assumed gains in weight are valued at 20
cents a pound. The estimated average annual net return over the 12
years is $2. 56 per acre with only 1 seeding and $1. 30 per acre when 2






-6-


seedings are required. If the Conservation Reserve Program is used
for 5 years, as in this illustration, the annual average net return over
the 12-year period is $4.88 per acre with 1 seeding and $3.98 per acre
with 2 seedings. Ordinarily, grazing is not permitted under this pro-
gram, so the grass seedings are not grazed for the first 5 of these 12
years.

Net incomes from cropping to wheat and from grazing, are compared
using average costs of production and average gains of steers grazing
seeded pasture, both over a 12-year period. Under these costs, and
with prices of $1. 70 a bushel for wheat and 20 cents per pound gain of
cattle, the net return per acre would be the same for wheat yielding 9. 2
- bushels as for seeded pastures producing 21. 8 pounds of cattle gain per
acre.

With the facts, assumptions, and examples set forth in this report,
maximum net income is obtained when all land yielding 5 bushels or less
of wheat per seeded acre is used as seeded pasture for summer yearlings.
This assumes expenses similar to those prevailing in 1954, and wheat at
$1. 70 a bushel. It further assumes that stock water is available. If
payments under the Conservation Reserve Program are included, maxi-
mum net income is obtained with all wheatland yielding 8 bushels or less
converted to seeded pasture. With wheat priced at only $1.40 a bushel
and no Government payments included, all wheatland yielding 6 bushels
or less needs to be used as seeded pasture for summer yearlings to ob-
tain the maximum net income.

Organization and efficiency of the enterprises as well as prices and yields
are factors in deciding the most profitable land use. Often nonprofitable
wheatland can be converted to seeded pasture and thereby increase the net
income of the ranch.

Other factors should be considered even though they are difficult to evalu-
ate. The kind and number of livestock to be used and the season of use may
affect the species of grass seeded and the acreage that can be utilized profit-
ably. A charge for livestock water should be included as this cost may change
greatly the net returns. A full stand of grass from the first seeding should
not be expected. Experience has shown that 100 percent success is the
exception.

To help carry the risk of a seeding failure and to finance the costs, finan-
cial or technical assistance can be obtained in most instances. The Agricul-
tural Conservation, Soil Bank, and Great Plains Conservation Programs may
be of substantial help in financing the costs of seeding cropland to grass.






- 7 -


THE PROBLEM

The wheat-producing areas of the Great Plains are receiving national
attention. This national interest centers around two basic questions:
How can dust storms be prevented, and what other uses can be found for
some of our wheatfields? Many people believe that yields of wheat are
too low for profitable production on some cropland in the Great Plains.
They believe that these lands would give more stable returns if they were
used for grazing and that through grazing, the soil-blowing problem would
be solved.

The study on which this report is based explored the economic feasi-
bility of grass as an alternative use for cropland in eastern Colorado. The
objectives of the study were to: (1) Learn the costs of seeding cropland
to grass under various situations; (2) find the minimum average yield per
seeded acre of wheat that would cover the costs of crop production with
given prices; and (3) estimate the dollar returns from cropland when
seeded to grass, with and without Government assistance.

Information as to the cost of seeding grass and the returns from graz-
ing was obtained from experiment station trials, Government land in land-
use projects, and farmers. Using this basic information, the compara-
tive advantages and disadvantages of seeding cropland to grass were ex-
plored and evaluated.

THE AREA STUDIED

The information obtained in the study reported here is applicable to a
10-county area in eastern Colorado. 1/ This area extends eastward from
the foothills of the Rocky Mountains to the State line and southward from
the South Platte River to the Arkansas River. The topography is level
to slightly rolling; it is broken by broad shallow drainage channels in the
north and by narrower deeper channels in the south. 2/

Before it was settled by farmers, this entire area was public land
used as range for cattle. Settlement began with homesteading in the 1870's
and 1880's. Today, there are about 4 million acres of tilled land and




1/ These counties are Cheyenne, Douglas, Elbert, El Paso, Kiowa, Kit
Carson, Lincoln, Phillips, Washington, and Yuma.
2/ Hunter, Byron, Type of Farming Areas in Colorado, Colo. Agr.
Expt. Sta. Bul. 418, September 1935.






-8-


nearly 7 million acres remain in grass. Generally speaking, the areas
of grass are interspersed with areas of cropped land.

During the last 15 years, wheat has become the dominant crop in the
area (table 1). The total acreage of cropland has doubled since 1939.


Table 1. Acreages of cropland and wheat, eastern Colorado, selected
years 1/

Item 1929 :1939 : 1949 : 1954

SNumber Number Number Number

Farms 2/ -----------------: 11,840 9,478 8,385 7,745
Acres Acres Acres A'cres

Total cropland 2/ ---------- 2, 847, 665 2, 121,460 3,977,925 4, 250, 194
Major crops har-
vested 2/ 3/ --------------:2,084,059 1,366,447 2,046, 861 1,689,734
Winter wheat seeded 4/ ----- 5/ 483, 898 1, 754, 460 1, 495, 430
Winter wheat harvested 4/---: 523, 953 357, 921 1, 286, 930 910, 990

1/ Cheyenne, Douglas, Elbert, El Paso, Kiowa, Kit Carson, Lincoln,
Phillips, Washington, and Yuma Counties.
2/ U. S. Census of Agriculture for Colorado.
3/ Wheat, barley, corn, sorghums, and hay.
4/ Colorado Agricultural Statistics.
5/ Not available'for this 10-county area.


The major part of the increase in cropland was for production of
wheat. The acreage of sorghum has increased to a lesser extent and
acreages of other major crops have decreased. The largest decreases
were in the acreages of corn and barley.

Although wheat has gained in importance in eastern Colorado, live-
stock has continued to have a prominent place in the economy (table 2).
From 1929 to 1954, the number of horses and mules declined by nearly
80, 000 while the number of cattle increased by 140, 000. The number of
sheep dropped slightly below that of 1929. Total numbers of livestock
have increased in the last 25 years.






-9-


Table 2. Numbers of livestock, by kinds, eastern Colorado, selected years


Kind of livestock 1929 :1939 :1949 :1954


SNumber Number Number Number

Horses and mules-------------- 88,849 46, 167 20, 627 10, 605

Cattle and calves -------------- 272, 742 261,960 407, 189 416, 145

Sheep and lambs --------------- 97,462 147,491 74,211 85,411


U. S. Census of Agriculture for Colorado.



Since 1929, farmers have increased the acreage of crops by 43 per-
cent and decreased the acreage of grass by 17 percent. But the numbers
of grazing livestock increased by 18 percent. Many people believe that
additional grassland could be utilized in this area. Some of them esti-
mate that as much as a half million acres of cropland should be returned
to grass. The total acreage of tilled land increases in each period of
years in which weather is favorable.

In this area, precipitation varies appreciably from year to year and
from farm to farm. A variation of even a few inches in rainfall means
the difference between abundant crop production or failure. Annual pre-
cipitation for the area varied from 8. 85 inches in 1934 to 23. 19 inches
in 1941. It was between 16 and 17 inches in only 3 years between 1900
and 1954, although the average for the period was 16. 65 inches. In the
54-year period, precipitation was less than 12 inches in 5 years and
above 20 inches in 7 years. As in many western areas, the years with
above- or below-average precipitation tend to bunch together. 3/For east-
ern Colorado, this bunching together is apparent from figure 1. It is
during the years of above-average moisture that grassland is plowed and
farmed. During drought years, some of this land is abandoned for farm-
ing.




3/ Clawson, Marion, The Western Range Livestock Industry, Ed. 1,
1950, pp. 39-44.





- 10 -


The 1954 Census of Agriculture shows that when farms were classi-
fied by major source of income, in 1949 the majority qualified as cash-
grain farms, whereas in 1954, the majority qualified as livestock farms
(table 3). The latter was a year of drought. This shift may be account-
ed for largely by differences in crop yields. Except for the effect of
wheat acreage allotments, few changes in farming were noted during
these 5 years. According to census data, most of the cash-grain farm-
ers in the area have some grassland and cattle. On these farms, some of
the cropland could be returned to grass, and utilized by simply expanding
the present livestock enterprises. On farms without livestock now, return-
ing cropland to grass would require the establishment of a livestock enter-
prise, which would be difficult in many instances.



WHEAT YIELDS AND PROFITABILITY
BU./SEEDED ACRE

1 2 . *.. .. . .
...................................... ..... .
'':':: : : :'' -Profitable for
:: :: wheat production

8


Doubtful

4

Nonprofitable for
wheat production

0-
WITH WHEAT AT $1.70 A BUSHEL AND 1954 PRODUCTION COSTS
U. S. DEPARTMENT OF AGRICULTURE NEG. 57 (12)-2422 AGRICULTURAL RESEARCH SERVICE


Figure .






- 11 -


Table 3. Number and characteristics of two major
eastern Colorado, 1949 and 1954


types of farms,


SLivestock other
Cash-grain than poultry and
Item dairy

S1954 1949 1954 : 1949


Farms----------------------number--: 2, 265 3,312 3,115 2,584
Average per farm:
Total size----------------- acres----: 1,207 1,072 2,082 2, 044
Cropland -------------------do. ----: 934 755 465 366
Pasture ---------------------do. ---: 272 311 1, 635 1,699
Winter wheat harvested ------do. ----: 257 251 67 49
Cattle and calves----------number--: 25 26 95 98


U. S. Census of Agriculture for Colorado.


Number of farms from


Economic Area 4; all other items from Economic Areas 4 and 4a.



EXPERIENCES IN SEEDING CROPLAND TO GRASS

Farmers' Experiences

Forty-six farmers in Kiowa, Kit Carson, Washington, and Yuma Coun-
ties in eastern Colorado reported their experiences in seeding cropland
to grass (table 4). Most of them seeded grasses in stubble fields of wheat
or sorghum. In the sandy areas, very few farmers reported any prepa-
ration of seedbed on their stubble fields before seeding grass. But on
"hard land, some farmers reported tillage operations in stubble fields
to kill weeds or improve the seedbed. 4/ The acreage seeded at any one
time usually ranges between 40 and 80 acres.

Most of these grass seedings were on hard lands, and crested wheat-
grass was the major species seeded. The usual seeding rate was 8 to 10
pounds per acre. Other species used included sand lovegrass, tall wheat-
grass, intermediate wheatgrass, and buffalo grass. These species have
been used more extensively in the last few years than formerly.


4/ "Hard land" and "sandy land" are terms commonly used in the area.
Hard land includes soils that have a relatively high content of silt and clay
particles. Sandy land has a higher content of sand.





- 12 -


Table 4. Cropland seeded to grass, eastern Colorado, 1954


Item Hard land 1/ Sandy land 2/


Farmers reporting ------number--: 31 15

Protective cover:
Most common ----------------- Wheat or barley Sorghum stubble
:stubble
Second in importance ----------: Sudan or sorghum Weeds (idle land)
stubble
Acreage per seeding:
Range ----------------acres--- : 5-200 10-640
Most common ----------do. ---- : 40-50 70-80

Species of grass seeded:
Farmers reporting-
Crested wheatgrass----number--: 20 6
Sand lovegrass---------do.----- 5 8

Seeding rate per acre:
Crested wheatgrass ----pounds---: 8 10
Sand lovegrass ---------do.-----: 1 2

Native pasture equal to 1 acre
of seeded pasture ----- acres----: 1.6 2. 0


1/ Hard lands are those soils with relatively high contents
2/ Sandy lands have a relatively high content of sand.


of silt and clay.


Grazing of seeded pastures on hard land started 1 to 3 years after
the grass was seeded. In favorable years, that is, when growth was
rapid, pastures were grazed a year after seeding. With less favorable
growing conditions, seedings were not grazed until they were 3 years old.

Fifteen farmers reported their experiences with seeding grass on sandy
soils. About half of these farmers seeded sand lovegrass at the rate of
2 pounds per acre. Others used crested wheatgrass at the rate of 10
pounds per acre. Fewer failures were reported on sandy soils with sand
lovegrass than with crested wheatgrass. On the average, about 50 percent
of the area seeded had to be reseeded to obtain a satisfactory stand. The
first seeding may be successful, but farmers should allow for at least a






- 13 -


partial failure. Usually 3 years were required to obtain a good stand of
grass on sandy soil even with a successful first seeding.

Some farmers increased their incomes by harvesting seed from new
seedings of sand lovegrass. During the early years, before the stand be-
came thick, some grazing was permitted in the spring. This helped to
control weeds. During the summer and fall, the grass was allowed to
mature and produce seed. These fields were grazed lightly again after
the seed was harvested.

The farmers interviewed did not have sufficient data to permit a de-
tailed analysis of grazing use of the seeded pastures. In some instances,
the seeded area was enclosed with another pasture prior to grazing so
that grazing use of the seeded area alone could not be recorded. In other
instances, the seeded area was grazed with other fields in late fall and
winter.

In the absence of data on grazing, farmers estimated the productivity
of seeded land in comparison with native pasture each year over a 10-year
period. These estimates indicate that seeded pastures are more productive,
especially from the fourth to the ninth year, as follows:





Respective year after seeding Productivity as a percentage of native
pasture

1st------------------------------------------------------------ 0
2d -------------------------------------- 100
3d -------------------------------------------------------------- 150
4th---------------------------------------------------------- 175
5th---------------------------------------------------------- 200
6th-----------------------------------------------------200
7th-------------------------------------------------------------- 190
8th---------------------------------------------------------- 180
9th-------------------------------------------------------------- 170
10th------------------------------------------------------------- 155
11th------------------------------------------------------------- 140
12th------------------------------------------------------------- 120

Average of 10 years, 2d through 11th. 166






- 14 -


The average estimated productivity of the seeded pastures over a 10-year
period was 66 percent greater than the productivity of native grassland.
That is, 1 acre of seeded pasture was estimated to yield as much as 1. 66
acres of native pasture.

Some individual estimates varied noticeably from the average. Because
of poor stands, some seeded areas were not grazed until the fifth year.
But several farmers reported 300 percent for the peak years of seeded
grasses. One farmer reported 200 percent for his seeded grass in its
10th year of use. Farmers prefer native grasses over seeded pastures,
provided they have enough native grass. These farmers have seen how
well such native grasses as the buffalo grass come back after a drought,
and they are not certain that introduced species will do this. Farmers
agree, however, that it is difficult to obtain a good stand of seeded buf-
falo grass. They prefer to seed the more productive species.

There is no guaranteed method or procedure for getting a stand of
grass on cropland. At present, farmers should strive for good stands
of grass by following the best recommendations for their areas. 5/
Some farmers have had complete failures in seeding cropland to grass.
Their seed, labor, and other costs were lost. No concerted attempt
was made to learn the cause of these failures. With successful grass
seedings, no one would guess as to how long the seeded species would
continue to outyield native pastures, although the farmers who cooperated
in the study agreed that seeded pastures yield more during the first few
years after a successful seeding than do native pastures.

Results of Experiments

Only recently have field tests of grasses been conducted on a large
scale in east-central Colorado and the results are as yet inconclusive.
Because of this, we sought additional information outside the immediate
area. Results of grass-seeding experiments are available from 3 land
use projects and 2 field experiment stations. 6/ Annual rainfall at the 3
land use projects is about the same as in eastern Colorado. The 2 ex-
periment stations, however, are in western Kansas and Oklahoma where
rainfall is somewhat higher.




5/ Tucker, R. H., and Hervey, D. F. Planting Non-Irrigated Crop-
land to Grass, Colo. Agr. Expt. Sta., Cir. 187-A, April 1957.
6/ Land use projects at Briggsdale and Springfield, Colo., and Elkhart,
Kans. Experiment Stations at Hays, Kans., and Woodward, Okla.






- 15 -


Soil moisture is the key factor in getting a stand of grass. Young
grass plants cannot reach far for moisture. As much as 90 percent of
the area seeded to grass on 2 of the land use projects failed in years of
light rainfall.

Seeding of grasses was done extensively on the Elkhart, Kans., land
use project. The abandoned fields and patches of grass were grazed by
cows and calves. Grazing was for the 6 months from May 1 to October
31. When less than 20 percent of the area had been seeded, 47 acres
were used per animal unit. When 50 percent was seeded, only 26 acres
were used. And when 80 percent was seeded, only 15 acres were used
per animal unit for a 6-month grazing period. The carrying capacity of
this area was tripled by seeding grass.

Pasture yields may be measured in various ways. Number of acres
per animal during the grazing season is the most common measure on
the range. Table 5 shows the period grazed and the acreage of seeded
pasture per animal or per animal unit at five locations. The smallest
number of acres per head for the season of use was at Hays, Kans.,
where annual precipitation is relatively high; a larger acreage per animal
unit was used at both Springfield and Briggsdale, where normally annual
rainfall is lower.

COSTS AND RETURNS OF SEEDING CROPLAND TO GRASS

The production and prices used in this analysis were developed from
farmers' estimates and data from other sources, which were considered
to be applicable to eastern Colorado. Farmers' estimates of production
of seeded pastures, as compared with native pastures, provided the basis
for determining output of seeded pastures. Farm budgets developed for
eastern Colorado show 16.4 pounds of gain per acre of native pasture
for yearling steers for a 6-month grazing season.

Expenses other than those for livestock include the costs of taxes,
seed, and all practices followed in planting a cover crop and establishing
the grass. In eastern Colorado, taxes on dry land are reduced from
about 30 cents per acre to 6 cents while grass is being established. After
the grass is established, the tax is increased to around 15 cents an acre,
as used in this illustration. Expenses for livestock include those for vet-
erinary services, taxes on cattle, labor, commission charges, hauling,
and fencing.

In seeding cropland to grass, 3 tillage operations are usually needed
to control weeds; they are followed by a late planting of sorghum. The
sorghum, which serves as a cover crop, is planted late so that it will






Table 5. Grazing period, carrying capacities, and animal gains on seeded pastures, 5 locations


SClass Season Acreage Average
Location Period of of for gain per
: covered : *:
cattle use season acre

Acres
per head Pounds

Woodward, Okla. ----------- 1946-52 Yearling Nov. 15toOct. 15 1/ 4.3 84
steers
Hays, Kans.:
Buffalo grass ------------: 1950-53 do. May 1 to Oct. 15 2.8 75
Western wheatgrass --------: 1950-53 do. Apr. 15 toOct. 15 2.0 127
Intermediate wheatgrass----: 1950-53 do. Apr. 15 toOct. 15 2.2 150

Acres per
animal unit

Elkhart, Kans. ------------- 1946-53 Mixed May 1 to Oct. 31 15 2/

Springfield, Colo. ----------- 1947-53 do. May 15 toNov. 15 24 2/

Briggsdale, Colo. ----------- 1948-53 do. May 15 to Oct. 15 23 2/


1/ Supplemented with 28 pounds of cottonseed cake, during the winter.
2/ Not available on land use projects.






- 17 -


not produce seed. Light grazing of the sorghum cover crop is possible
in late winter if the crop attains sufficient growth. In the following spring,
grass is seeded in the sorghum stubble. The new grass is not grazed
during the first 2 summers, but weeds are clipped 3 times during the
2-year period. Grazing of this new seeding is started in the spring of
the third year after seeding if all goes well. The productivity of seeded
land is calculated and considered for a 10-year period. This, with 2
years for establishment, provides a total of 12 years to consider costs
and returns from cropland seeded to grass.

For the 12-year period, the average net return was $2.56 per acre
(table 6). After grass is established, net return increases gradually to
$4. 59 per acre in the fifth and sixth years after seeding and then gradu-
ally declines.

Some farmers like to know how long it will take before income "will
exceed expenses. This is shown in the last column of table 6. At the
end of the first year after seeding grass, the accumulated net expenses
are $3. 70 an acre. By the end of the third year after seeding, cumula-
tive income has exceeded cumulative expense, and seeding continues to
show a profit through the rest of the 12-year period.

Grass seedings are not always successful on the first attempt, and a
second seeding may be necessary on part or all of the area seeded. If
the first seeding is assumed to be a complete failure after 2 years and
a new seeding is made, the practices and expenses must be repeated.
This also means a 3-year delay in getting grass established. In terms
of production, this delay means that the productivity of seeded pasture
has progressed to only the seventh year after seeding, as shown in table
6. In this instance, net returns are reduced to $1.30 an acre for the 12
years, which is about 50- percent of the returns when the first seeding
is successful. Thus, we see that failures in seeding cropland to grass
are expensive. The greatest cumulative net expense would be $7. 40 oc-
curring 6 years after the first cover crop. It would take an additional:
3 years for cumulative income to exceed-cumulative expense.

Presently, two Government programs can be used to help pay the cost
of seeding cropland to grass. These are the Agricultural Conservation
Program and the Conservation Reserve Program of the Soil Bank.

Ordinarily, ACP payments for seeding grass are limited to 50 per-
cent of the cost, or $5 an acre, whichever is smaller. In this illustration,






- 18 -


Table 6. Expenses and returns per acre in seeding cropland to grass
when summer-grazed by yearling steers, eastern Colorado 1/

:Produc-: Cattle gain Net returns
:tivity of: :Expense:
Item : seeded: : :for land:
pasture: Weight: Value: and :Annual: Cumu-
: 2/ : cattle :: lative

Percent Pounds Dollars Dollars Dollars Dollars

Seeding cover crop---: --- 35 7.00 5.08 1.92 1.92
Seeding grass -------: --- 0 --- 4. 85 -4.85 -2.93
Year after seeding:
1st----------------: 0 0 --- .77 -.77 -3.70
2d ----------------: 100 16.4 3.28 1.07 2.21 -1.49
3d ----------------: 150 24.6 4.92 1.56 3.36 1.87
4th ---------------: 175 28.7 5.74 1.77 3.97 5.84
5th ---------------: 200 32.8 6.56 1.97 4.59 10.43
6th ---------------: 200 32.8 6.56 1.97 4.59 15.02
7th ---------------: 190 31.2 6.24 1.89 4.35 19.37
8th ---------------: 180 29.5 5.90 1.81 4.09 23.46
9th ---------------: 170 27.9 5.58 1.73 3.85 27.31
10th---------------: 155 25.4 5.08 1.61 3.47 30.78
12-year average ----- 3/127 23.7 4.74 2.18 2.56 2.56


1/ From table 17.
2/ Productivity is shown as


a percentage of the productivity of native


pasture as estimated by farmers.
3/ For the 9 years grass is grazed, this is


169 percent.


ACP payments of $2. 27 are possible in the year of seeding grass. 7/
This payment could reduce the deficit in the year of seeding from $4. 85
to $2.58.

If seeding is done under the Conservation Reserve program, up to 80
percent of the seeding cost is borne by the Government. Annual rental


7/ The $2. 27 is derived from table 14 by taking the estimated variable
costs per acre for the second year, which is $4. 35 plus equipment, taxes,
and repairs of 20 cents, to obtain a total estimated cost of $4. 55 for fig-
uring Government payments. Taking 50 percent of this $4. 55, we have
$2.27.






- 19 -


payments are made. The land cannot be grazed during the time it is
under contract. For illustration, assume that the land is in the Conser-
vation Reserve, is not grazed for the first 5 years, and the annual rent-
al payments are $7 per acre. This is the typical rate of payment in
the area. Assume that $3. 64, or 80 percent of the cost of seeding, is
paid. Assume also that the productivity of the pasture develops at the
same rate as when it is grazed. With these assumptions, the 12-year
average annual net return is $4. 88 per acre of cropland seeded to grass
(table 7). In each year, income is larger than expenses. If a second
seeding is necessary, a deficit would occur in the fourth year after seed-
ing grass because the land would no longer be in the Conservation Re-
serve, nor would it be ready to graze. With 2 seedings, the average
annual net return would be $3.98 an acre. Under some circumstances,
assistance can be provided by the Conservation Reserve for a second
seeding of grass but we have not included that possibility in this analysis.

The monetary advantage of using Government programs can be illus-
trated by figure 2. By the end of the fifth year (the 3d year after seed-
ing grass), a payment for establishing the seeding plus 5 years of Con-
servation Reserve annual payments show cumulative net returns of
$29. 65 an acre. Without Government payments but with some grazing,
cumulative net returns are only $1. 87 per acre at the same stage of pas-
ture development. This is an annual difference of $5. 56 per acre. After
the fourth year after seeding grass, Government rental payments would
cease, and annual net returns would be the same as in the previous illus-
tration.

MINIMUM YIELDS OF WHEAT NEEDED TO COVER COSTS

Productivity of land determines its most profitable crop use. Most
of the land in eastern Colorado will return a profit when it is in grass
and utilized by livestock. Under present conditions, croplands of higher
productivity, will return a greater profit if they remain in wheat. Under
the same conditions, croplands of low productivity might return a great-
er profit if they were seeded to grass and pastured. The problem is to
determine the characteristics of this land productivity and the most prac-
tical criterion appears to be prospective yield. If yields of wheat are
too low to cover all the necessary expenses of production in the long run,
clearly such lands should be shifted to some other use. Grass is the
most likely alternative use of land in this area.

Costs of production may be divided into two components for purposes
of analysis. Ordinarily, direct cash operating costs must be met each
year. Such overhead items as depreciation charges and interest earned
on investment may be postponed for any one year, but if the farmer is






- 20 -


Table 7. Expenses and returns per acre in seeding cropland to grass
under 1957 Conservation Reserve Program when followed by summer
grazing of yearling steers, eastern Colorado 1/


Produc- Conser- Cattle gain iExpense Net returns
Item tivity of vation- : for land :
seeded reserve e t and : A Cumu-
Spastureipayment Weight : Value : c Annual:
pasture payment cattle lative

Percent Dollars Pounds Dollars Dollars Dollars Dollars

Seeding cover
crop------- --- 7.00 --- -- 3.16 3.84 3.84
Seeding
grass------ --- 2/ 10.64 --- -- 4.85 5.79 9.63
Year after
seeding:
1st ------- --- 7.00 --- -- .77 6.23 15.86
2d ------ --- 7.00 -- --- .06 6.94 22.80
3d-------- --- 7.00 --- --- .15 6.85 29.65
4th ------- 175 --- 28.7 5.74 1.77 3.97 33.62
5th ----- 200 --- 32.8 6.56 1.97 4.59 38.21
6th ------- 200 --- 32.8 6.56 1.97 4.59 42.80
7th ------- 190 --- 31.2 6.24 1.89 4.35 47.15
8th ------- 180 -- 29.5 5.90 1.81 4.09 51.24
9th ------- 170 --- 27.9 5.58 1.73 3.85 55.09
10th ------ 155 --- 25.4 5.08 1.61 3.47 58.56

12-year
average---- --- 2.92 --- 3.47 1.81 4.88 4.88

1/ From table 17.
2/ Includes $3. 64, which is 80 percent of the costs of $4. 55 used in
figuring Government payments.


to stay in business, they must be met over a period of years. In fact,
many wheat farmers earn little or no return on their investments during
periods of dro.ught.

To determine the component costs in production of wheat, let us as-
sume a farm unit with 960 acres of cropland, operated under a wheat-
fallow rotation. The usual practice is to seed wheat on summer fallow
land. We can calculate the different field operations from one harvest
through the next, including a year of summer fallow.





- 21 -


Cumulative Net Returns

GRASS SEEDINGS


YEARS
0 1 2 3


OF GRASS
4 5


0 1 2 3 4 5 6 7
TOTAL YEARS


6 7 8 9 10


8 9 10 11 12


Figure 2



The most common tillage operations reported by farmers start with
a one-way plow. This plowing is done in late spring to turn under the
wheat stubble of the previous year's harvest. Following the one-way
plowing, 5 additional tillage operations are necessary to control weeds
during the rest of the summer. These are chisel twice, sweeps, duck-
foot, and rod weed. Each of these operations is accomplished at an av-
erage rate of 40 acres in 10 hours. In the fall, seed wheat is drilled
at the rate of 30 pounds to the acre, and about 20 acres are drilled in
a 10-hour day.


$

60

40

20

0.

-20


U. L DEPARTMENT OF AGRICULTURE


SEE TABLES 6 AND 7
NEG. 57(12)-2421 AGRICULTURAL RESEARCH SERVICE






- 22 -


The estimated cash costs per acre of these preharvest field operations
are:

Item Dollars

Tractor fuel------ ------------------------------------------ 0. 80
Labor @ $1.00 per hour -------------------------------------- 2.00
Seed--------------------------------------------------------- 1.12
Repairs --------------------------------------------------- 1.18
Total ---------------------------------------- 5.10

With wheat selling at $1. 70 a bushel, these preharvest costs are covered
by 3. 0 bushels of wheat per seeded acre. This relatively low preharvest
cash expense helps to explain why growers seed a crop of wheat even
when weather is relatively unfavorable.

Costs of harvesting wheat include the operation of a self-propelled
combine and hauling the wheat to market. These per acre costs are es-
timated as follows:

Item Dollars

Combine and truck fuel --------------------------------------- 0.57
Labor @ $1.00 per hour ------------------------------------- .40
Repairs ---------------------------------------------------- 1. 03
Total --------------------------------------- 2.00

With the price of wheat at $1. 70 a bushel, it takes 1. 2 bushels to pay
the cost of harvesting. This relatively low cash expense for harvest
helps to explain why growers can afford to harvest a relatively poor crop.

The cash operating costs of preharvest and harvest together amount
to $7.10 per acre, provided the entire seeded acreage is harvested (table
8). In this case, a yield of 4. 2 bushels is required to cover these costs.
However, as abandonment averages about 30 percent in the area, this re-
duces the total expenses of harvesting. Thus, 3. 8 bushels is the average
yield required to cover cash operating costs per seeded acre in the area.
In Kiowa County, where abandonment is especially high, the necessary
yield is 3. 6 bushels. In other counties, the necessary yield varies from
3.7 to 4.0 bushels per seeded acre (table 9).

Cash operating expenses must be met each year. Although costs and
returns may vary each year, we assume here the same costs and returns
that were estimated for 1954. Using these assumptions in all except 5 cf







- 23 -


Table 8. Costs of production, and yield required to equal costs per seeded acre,
winter wheat, by percentage of abandonment, eastern Colorado, 1954 1/

: Percentage of abandonment
: of wheatland
Item
: None 30 percent : 60 percent


Dollars


Cash costs:
Preharvest--------------------------
Harvest-----------------------------
Taxes:
Equipment-------------------------
Land------------------------------

Total----------------------------

Noncash costs:
Depreciation on equipment -----------
Interest:
Equipment-------------------------
Land------------------------------
Total----------------------------

Total, all costs ----------------

Yield per seeded acre need to equal-
Cash costs:
Preharvest------------------------
Harvest---------------------------
Taxes:
Equipment-----------------------
Land ----------------------------
Total cash costs---------------

Noncash costs:
Depreciation-----------------------
Interest on equipment --------------
.Total noncash 3/ --------------


Total 3/ -------------------- :


5.10
2.00

.37
.60

8.07


Dollars


5.10
1.40

.37
.60

7.47


iuollars

5.10
.80


.37
.60

6.87


: 3.68 3.68 3.68

: 1.10 1.10 1.10
: 4.80 4.80 4.80
S 9.58 9.58 9.58

S 17.65 17.05 16.45




: 3.0 3.0 3.0
: 1.2 .8 .5

: .2 .2 .2
.4 .4 .4


4.8


2.2
.6
2.8


7.6


4.4


4.1


2. 2
.6
2.8


6.9


1/ Includes costs for an acre in fallow.
2/ Calculated at $1. 70 per bushel for wheat.
3/ Does not include interest on land.


--


.






- 24 -


Table 9. Average yield of winter wheat per seeded acre, and yield needed
to cover specified costs, 1954, by counties, eastern Colorado

Yield needed to cover- Years in last
Average yield 28 that county
County per seeded :average yield
S acre, 1929-56: Total : Operating :was too low to
: 1/ expenses 2/ expenses 3/ :cover operat-
S- : ing expenses

SBushels Bushels Bushels Years

Cheyenne------- : 7.3 7.1 3.7 12
Douglas -------- : 15.6 7.4 4.0 0
Elbert --------- : 10.1 7.3 3.9 7
El Paso -------- : 8.9 7.2 3.8 3
Kiowa---------- : 6.1 7.0 3.6 12
Kit Carson ----- : 9.6 7.2 3.8 11
Lincoln -------- 9.3 7.2 3.8 11
Phillips -------- : 14.0 7.3 3.9 5
Washington ----- : 11.6 7.3 3.9 7
Yuma ----------: 13.2 7.3 3.9 4

10-county
average ------ 10.7 7.2 3.8 5

1/ Based on unpublished data in Departmental files. Weighted by acres
seeded.
2/ Includes all expenses enumerated in table 8, except interest on in-
vestment in land. Costs differ because of different percentages of aban-
donment.
3/ Includes all cash costs listed in table 8, except interest on land.

the 28 years from 1929 to 1956 inclusive, the average yield for the 10-
county area was above the necessary yield of 3. 8 bushels per seeded
acre (table 9). This is about one-sixth of the time. In Cheyenne and
Kiowa Counties, the average yield of wheat was below the necessary
yield in 12 of the last 28 years, or about 40 percent of the time. In
such areas, farm operators frequently end the year with a cash operat-
ing loss. They must depend on accumulated savings, nonfarm earnings,
or borrowing to meet family living expenses and to finance the next year's
operations.

Not only cash expenses but total expenses of production, including over-
head, must be met over a period of years if farmers are to stay in business.






- 25 -


In addition to the $7.10 cash operating cost per seeded acre, $0..97 per
acre should be added for taxes on land and equipment and $4. 78 for in-
terest and depreciation on equipment. This totals $12.85 per seeded
acre, if all seeded acres are harvested. In the 10-county area, where
about 70 percent is harvested, the total expense per seeded acre is about
$12.25. If wheat sells for $1.70 a bushel, this expense would be cov-
ered by 7. 2 bushels. From 1929 to 1956, the yield per seeded acre in
the 10-county area averaged 10.7 bushels. This yield provides a margin
of about 3. 5 bushels, or $5.95 (at -$1. 70 a bushel) per seeded acre, to
cover investment in land and a return td management. Average yields are
above the minimums necessary to cover specified total expenses in each of
the counties, except Kiowa (table 9).

In Kiowa County, where the average yield is 6. 1 bushels per seeded
acre, and where on the average, about 50 percent of the seeded acreage
is abandoned, the yield necessary to cover total expenses would be about
7.0 bushels per seeded acre with wheat at $1.70 a bushel. In this county,
average yields are nearly a bushel short of covering total expenses, not
to mention any return to investment in land or to management. Some
farmers in this county may operate more acres and thus may be able to
effect lower costs of depreciation per acre, which would mean lower total
expenses per seeded acre.

As yields of wheat differ considerably between parts of a county, be-
tween farms, and between fields, there may be many instances in east-
ern Colorado in which the average yield is too low to cover total expenses
over a period of years.

We should remember that the yields referred to are average yields
over a period of years. In a year of especially favorable weather, yield
may be very high even on lands of low productivity. These exceptional
yields often follow a year or more of crop failure. Over a period of
several years, the returns from these fields of low productivity do not
cover the cost of crop production, even though some good years are in-
cluded.

No attempt is made here to identify by soil description or location
the lands that could be more profitable if taken out of tilled crops. Such
lands are best identified through the experience of farm operators. The
potential yield of these lands in relation: to better lands may be illustrat-
ed by figure 3. The lower shaded area represents the yields of wheat
that are not likely to show a profit over a period of years. The middle
area indicates those croplands that show a loss in most years but which
in exceptional years may return a big profit. It is the hope of getting a
good crop "next year" and of seeding wheat to maintain the acreage base
that keeps much of this land in cultivation.






- 26


Figure )


Any cropland that does not return a margin of profit over a period of
years should be shifted to another use or remain idle. Pasture is fre-
quently suggested as another use in eastern Colorado. It is assumed that
although gross returns from an acre of pasture will be lower than those
from an acre of wheat, they will be sufficient to cover the much lower
expenses of pasture. A comparison of net returns from low-yielding wheat
and from pasture is found in the following section.


ANNUAL PRECIPITATION
Eastern Colorado


30


20


1960


SOURCE: DEPARTMENT OF COMMERCE


NEG. 57 (12)-2420 AGRICULTURAL RESEARCH SERVICE


L. % DEPARTMENT OF AGRICULTURE





- 27 -


COMPARISON OF NET RETURNS FROM WHEAT AND FROM GRASS

Changing land use from cultivated crops to seeded grass involves long-
term considerations. It is more than a question of cash costs and re-
turns. It is a question of yield and returns that will cover depreciation
as well as cash costs. If the yield of wheat is too low to cover cash
costs and depreciation, then some other enterprise or land use should be
considered.

In the present analysis, lacking more precise data, we have assumed
that with changes in land productivity, livestock gains from seeded pas-
tures will deviate about 5 percent from the average for each 10-percent
deviation in the yield of wheat. This means that if seeded to pasture,
lands on which yields of wheat are 10 percent below average would pro-
duce grazing and livestock gains 5 percent below average. Although this
relationship is not based on experimental evidence, it represents the best
considered judgment of those associated with the study.

In this illustration, the average yield of 10. 7 bushels of wheat in the
10-county area gives a net return of $1, 126 from 320 acres of wheatland
(table 10). This assumes that 160 acres are summer-fallowed each year
and that 160 acres are seeded to wheat. Although the yield is for the
160 seeded acres, figuring harvesting expenses, we assume 30 percent
average abandonment for this area. As the yield decreases on progres-
sively less productive soils, net returns are reduced until at a yield of
6.-4 bushels per seeded acre of wheat, the net return is $2. Comparable
data for various land-productivity levels are shown for 320 acres used as
seeded pastures. The average production on seeded pastures is 23. 7
pounds of livestock gain per acre, with a net return of $818 on the 320
acres. This is based on the estimated average for a 12-year period, as
shown previously. The net return from seeded pasture is near zero with
a livestock gain of 5. 9 pounds per acre.

Land having a yield of 9. 2 bushels of wheat per seeded acre is assum-
ed to yield 21.8 pounds of livestock gain, if used for seeded pasture. At
these yields, the net returns from 320 acres are the same, $733 for
either wheat or livestock. Soils that give the same net return for wheat
as for pasture could be used for either with no loss of income.

HOW MUCH WHEATLAND SHOULD BE SEEDED TO GRASS?

The acreage of wheatland that can be seeded profitably to grass on a
particular farm depends on the productivity of the soil and the organiza-
tion of the farm. In areas where yields of wheat are high, a shift to
grass probably would give lower net returns. In areas where yields are









Table 10. Comparison of net returns from 320 acres of land used for


wheat or pasture, by productivity of land,


eastern Colorado 1/


Production 2/ : :
_____ -__: Gross :
productivity Net
Productivity : : : income :Expense:
: Unit : .: Total :3/ : 4/ :return
acre
: : : :


Wheatland: 5/
Average, eastern
Colo. -------------


SBushel


90 percent of
average ----------- : do.
86 percent of
average 6/--------- do.
80 percent of
average ----------- do.
60 percent of
average 7/-------- do.


Seeded pasture:
Assumed average,
eastern Colo. ------ Cwt.
95 percent of
average ----------- do.
92 percent of
average 6/--------- : do.
90 percent of
average ----------- : do.
25 percent of
average 7/---------: do.


10.7

9.6

9.2

8.6


Dollars Dollars Dollars



1,712 2,910 1,784 1,126

1,536 2,611 1,773 838

1,472 2,502 1,769 733

1,376 2,339 1,762 577


6.4 1,024 1,741 1,739




.237 75.8 1,516 698

.225 72.0 1,440 676

.218 69.8 1,396 663

.213 68.2 1,364 655


.059 18 9


378


818

764

733

709


376


1/ Developed from tables 6 and 8, excluding interest.
2/ Wheat on wheatland; gain of yearling steers on seeded pastures.
3/ Wheat at $1. 70 per bushel and cattle at $20.00 per cwt.
4/ Expense on wheat allows for 30 percent abandonment (table 8) with
hauling costs reduced with lower yields. N
5/ 160 acres seeded to wheat and 160 acres summer-fallowed.
6/ At this yield, net returns from wheat and seeded pasture are equal.
7/ At this yield, gross income and expense are about equal.






- 29 -


low, a larger proportion of wheatland might well give higher returns if
seeded to grass.

We have set up an example to illustrate how the elimination of the
low-yielding parts of a wheatfield will increase the average yield of the
land remaining in wheat and may increase net income. We used the 960-
acre crop unit, described earlier, as the base unit.

Let us assume 480 acres in wheat and 480 acres in summer fallow,
an average yield of 10.7 bushels of wheat per seeded acre, and a total
production of 5, 136 bushels of wheat (table 11). Suppose that 40 acres
of wheatland yielding 4 bushels per seeded acre are taken out of wheat.
This decreases the production of wheat by 160 bushels. As the original
production was 5, 136 bushels, the land remaining in wheat produces
4, 976 bushels, or a yield of 11. 3 bushels per seeded acre. Suppose we
continue to take out 40-acre tracts until 240 acres have been removed
from wheatland. And suppose each successive 40 acres has a yield po-
tential of 1 bushel more per acre than the preceding 40-acre tract. Let
us further assume that the land taken out of wheat is used for grazing;
it is seeded to grass and used as summer pasture by yearling steers.
The gains in weight made by the yearlings during the summer vary with
the productivity or yield of wheat for this land (table 12). The output in
pounds 6f gain for yearlings grazing this land increases from 16. 3 pounds
per acre on 4-bushel wheatland to 21. 8 pounds per acre on 9-bushel
wheatland.

Total gains for yearlings are based on twice the acreage diverted from
wheat because for each acre of wheat seeded there is also an acre of
summer fallow.' Net sales of yearlings represent the difference in value
between purchases and sales. Yearlings weighing 500 pounds are bought
in the spring at $21 per 100 pounds, and are sold in the fall at a weight
of 750 pounds for $19. 50 per 100 pounds. This gives a net sale of
$16. 28 for each 100 pounds of gain, after allowing for death losses.

Expenses for livestock include costs of labor, taxes, veterinary serv-
ice, salt, hauling and commission charges, fence, pickup truck, and a
saddle horse. These expenses total $1. 34 per acre for an average gain
of 23. 7 pounds per acre. Net returns are $71 on the first 80 acres of
4-bushel wheatland used as pasture. As more 80-acre tracts are convert-
ed to pasture and as the productivity of this land increases, net returns
increase to $569 with 240 acres in grass. But the net income from year-
lings must be combined with the net income from land remaining in wheat.

The production and net income of the land r-emaining in wheat is shown
in table 13, with wheat at $1. 70 a bushel. Expenses of $6. 50 per acre







- 30 -


Table 11. Estimated effects on total production of wheat from a 960-acre farm of removing from production
successive 40-acre tracts, beginning with the lowest yielding land, eastern Colorado

Land removed from wheat : Land remaining in wheat
., : ,,., : Cumulative ' '*
40-acre Yield Production: Cumulative : Average
tracts per acre for tract Area Average Production Area yield :Production
S:yield
Bushels Bushels Acres Bushels Bushels Acres Bushels Bushels

None --- --- 0 --- --- 480 10.7 5,136

1st 4.0 160 40 4.0 160 : 440 11.3 4,976

2d 5.0 200 80 4.5 360 400 11.9 4,776

3d 6.0 240 120 5.0 600 360 12.6 4,536

4th 7.0 280 160 5.5 880 320 13.3 4,256

5th 8.0 320 200 6. 0 1,200 280 14.0 3,936

6th 9.0 360 240 6.5 1,560 240 14.9 3,576


Table 12. Estimated production and net returns from yearling steers grazed during the summer on land removed
from wheat and seeded to grass, beginning with lowest yielding 40-acre tracts, eastern Colorado

Land removed from wheat : Production of beef
: : : Weight gain : : L
40-acre : Yield of : Acreage: For each : :Net sales cattle Netincome
s : wheat Areage o r aea Totelale : Net income
tractsPer 80-acre gTotal : of beef 3/ : se from beef
:per acre : acre 2/ :: : expense
pe -ctract

Bushels Acres Pounds Pounds Pounds Dollars Dollars Dollars

1st 4 80 16.3 1,304 1,304 : 212 141 71

2d 5 160 17.4 1,392 2,696 439 287 152

3d 6 240 18.5 1,480 4,176 680 438 242

4th 7 320 19. 6 1,568 5,744 935 594 341

5th 8 400 20.7 1,656 7,400 1,205 754 451

6th 9 480 21.8 1,744 9, 144 1,489 920 569

1/ Each 40 acres removed from wheat releases another 40 acres from summer fallow, so that 80 acres
may be put in grass.
2/ As progressively better tracts of land are used, the increase in production of beef per acre is assumed
to be half as rapid as the increases in the production of wheat.
3/ Difference between sales price and cost of yearling steers is calculated at $16. 28 for each 100 pounds
of gain after allowing for a 2. 2 percent death loss.







Table 13. Net returns from wheat and yearlings with given acreages of less productive land
used as pasture, eastern Colorado


Land remaining in wheat Net income
: :from year- Total net
lings grazed income from
Acres / Production Income 2/ Cash Net on land diver- wheat and
Acres :Production/: Income expense 3/ income ted from yearlings
.wheat 4/

Bushels Dollars Dollars Dollars Dollars Dollars

480 5,136 8,731 3,120 5,611 --- 5,611

440 '4, 976 8, 459 2, 860 5, 599 71 5, 670

400 4,776 8, 119 2,600 5, 519 152 5,671

360 4,536 7,711 2,340 5,371 242 5,613

320 4,256 7,235 2,080 5,155 341' 5,496

280 3,936 6, 691 1,820 4, 871 451 5, 332

240 3, 576 6,079 1,560 4, 519 569 5, 088

1/ From table 11.
2/ Wheat production at $1.70 a bushel.
3/ Seeded acres at $6. 50 an acre (table 8).
4/ From table 12. Assumes that 1 acre of fallow is converted to pasture for each acre of
wheat converted.






- 32 -


include only the cash costs of preharvest and harvest allowing for a 30-
percent abandonment in the seeded acreage of wheat. Net income from
this wheatland with a wheat-fallow rotation and 480 acres in wheat is
$5, 611.

With the first 40 acres diverted from wheat (80 acres of wheatland),
net income of the land diverted from wheat plus that of land remaining
in wheat gives a total net income for the 960 acres of $5, 670. This is
$59 more than before the change. It should be stressed that each 40
acres taken out of wheat is combined with 40 acres of summer-fallow
land that has the same average yield and results in the acreage of grass
being twice the acreage taken out of wheat. Suppose a second 40-acre
tract that yields only 5 bushels is diverted from wheat and seeded to pas-
ture. This changes net income hardly at all. If a third 40-acre tract
yielding 6 bushels is converted from wheat to pasture, net income is re-
duced. Conversion of 7-bushel and higher yielding land reduces the net
income still further. Under the conditions .assumed in this illustration
of costs as in 1954, with wheat at $1.70 a bushel and beef at 20 cents
a pound, it would pay to regrass all wheatland having an average yield
of 5 bushels or less an acre. Maximum net return is obtained when
either 40 acres of 5-bushel land, or this 40 plus another 40 acres of
6-bushel land are diverted from wheat, seeded to permanent pasture,
and used for grazing steers. Shifting both the 4- and the 5-bushel land
on the farm used as an illustration would reduce the acreage in wheat
by 17 percent, but it would reduce production of wheat by only 7 percent.

What kind of land would it pay to shift out of wheat if the land is
signed under the Conservation Reserve Program for the first 5 years?

Under the Conservation Reserve Program, there would be smaller
cattle gains and less cattle expense over the 12-year period, because
grazing is permitted neither on the cover crop nor for the first 2 years
after grass is established. In return, the Government annual rental pay-
ment is assumed to be $7 per acre for 5 years, plus $3. 64 per acre to-
ward the cost of seeding. These payments are assumed to be constant
and not variable according to yield. This makes a total payment of
$38. 64. Pounds of gain- for yearlings are reduced to 73. 3 percent to al-
low for 3 years of nongrazing. Land expense remains unchanged, but
cattle expense is only 73.1 percent of that shown for the 12-year period
with no restrictions on grazing.

With Conservation Reserve payments, land of higher productivity can
be converted to grass profitably. As each 40 acres of progressively more
productive land is taken out of wheat, total net income increases, until
it reaches a maximum of $6, 400, when all land yielding 8 bushels or






- 33 -


less of wheat is used for seeded pasture (table 14). Wheatland that
yields 9 bushels or more would show a reduction in net income if seeded
to pasture.

In view of the average county yields shown in table 9 and the assist-
ance now available under the Conservation Reserve Program, many
farmers could have larger net incomes if some of the less productive
wheatlands were used as pasture. Under this program, farmers can
shift a larger acreage of low-quality land out of wheat than would be
possible otherwise.

INFLUENCE OF PRICE ON LAND USE

In the analyses up to this point, we have assumed one set of prices
for wheat and yearling steers. At other prices, the kind of land that
could be shifted from wheat to grass profitably would change. In view
of present supplies of wheat and existing technologies of production, the
most likely price move will be downward. Therefore, a lower price is
used to illustrate the productivity level at which wheatland can be more
profitable if used as pasture.

In this example, the price of $1.40 a bushel is used instead of the
$1. 70 used previously. With a wheat-fallow rotation on 960 acres, this
lower price gives a net income of $4, 070 (table 15). This $4, 070 net
income now becomes the basis for comparison.

As each 40-acre tract of progressively more productive land is taken
out of wheat, together with the 40 acres of fallow, and pastured by year-
lings, the net income increases until 6-bushel land is included. With all
the 4- to 6-bushel wheatland (240 acres) used for grazing, net income is
$4, 252, or $182 larger than the base of $4, 070.

Combining lower prices of wheat with the Conservation Reserve Pro-
gram would raise the minimum level of productivity or yield at which
land would be more profitable for wheat. Thus, it appears that farmers
should give serious thought to seeding grass on relatively low-yielding
wheatland.

ADDITIONAL FACTORS TO BE CONSIDERED

Any change in land use from wheatland to grass in eastern Colorado
must be thought of as a long-term change. Ordinarily, it is not profit-
able to seed land to grass and after a year or two plow it up and crop
it. In addition to costs of seeding and establishing pastures, some farms
might need to develop stock water. This cost was not included in the







- 34 -


Table 14. Net returns from 960 acres of land, with given acreages of the less productive land in
the Conservation Reserve Program for 5 years, then grazed for 7 years, eastern Colorado


: Assumed: Summer' yearlings 1/ : Net income from-
Total area yield Land and Wheat
in grass : for :Cumulative: Net cattle : Summer :Wheat 5/ and
in grass for cattle ex- Wheat 5/ and
: gains 2/ : sales 3/ : : yearlings
wheat pense 4/ yearlings yearlings

Acres Bushels Pounds Dollars Dollars Dollars Dollars Dollars

0 : 0 0 0 0 0 5,611 5,611

80 : 4 955 413 121 292 5,599 5,891

160 : 5 1,976 837 246 591 5,519 6,110

240 6 3,061 1,271 374 897 5,371 6,268

320 7 4,210 1,715 506 1,209 5,155 6,364

400 : 8 5,424 2,171 642 1,529 4,871 6,400

480 : 9 6,702 2,637 781 1,856 4,519 6,375

1/ Taken from tables 12 and 17.
2/ Adjusted for only 7 years grazing in 12, or 73. 3 percent of gains.
3/ Net sales of $16.28 per cwt., plus $38.64 per acre of Conservation Reserve payment in the
first 5 years averaged over the 12 years, which gives $3. 22 an acre.
4/ Land expense of $0. 84 an acre, plus cattle expense for 7 years adjusted to 12-year average
(73. 1 percent).
5/ Taken from table 13.



Table 15. Net returns from 960 acres of land, with wheat at $1.40 a bushel, and with given acre-
ages of the less productive land used as pasture, eastern Colorado

Land remaining in wheat Net income from -
SYearlings
S. : :on grazing:
Acres Yield :ProductionIncome 2/: Cash : Net land divert Wheat and
Acres1/ d 1/ :In e /:expense 1/: income :ad from : yearlings
ed from
wheat 3/

Bushels Bushels Dollars Dollars Dollars Dollars Dollars

480 : 10.7 5,136 7,190 3,120 4,070 0 4,070

440 : 11.3 4,976 6,966 2,860 4,106 71 4,177

400 11.9 4,776 &, 686 2,600 4,086 152 4,238

360 12.6 4,536 6,350 2,340 4,010 242 4,252

320 : 13.3 4,256 5,958 2,080 3,878 341 4,219

280 14.0 3,936 5,510 1,820 3,690 451 4,141

240 14.9 3,576 5,006 1,560 3,446 569 4,015

1/ From table 11.


]/ Wheat production at $1.40 a bushel.
3/ From table 13. The yield of wheat on this land is assumed
come, 5 bushels with $152, 6 bushels with $242, and so on.


to be 4 bushels with $71 net in-






- 35 -


previous analysis as the situation varies widely from farm to farm. In
some instances, the cost of water development would discourage farmers
from converting poor wheatland to pasture. Again, cost-share assistance
under the Agricultural Conservation Program would lower substantially
the cost of dams, wells, and pipelines needed to service the range live-
stock.

Depreciation on farm equipment, an overhead cost, was not included
in the preceding analysis of net income from land taken out of wheat. It was
assumed that depreciation on power and equipment would not change with
a moderate reduction in acres cropped. If the acreage cropped is per-
manently reduced, the farmer might eventually reduce his equipment in-
ventory through attrition, which in time would permit a lower deprecia-
tion charge. But he may buy or rent other suitable cropland to replace
the acreage withdrawn from crops. These possibilities should be consid-
ered when the question of converting cropland to pasture arises.

Some farmers may find it desirable to take out of wheat some land
with above-marginal yields. One instance would be in order to block up
several pasture areas or to connect a less productive area with pasture
or with stock water. Again, some good land could be taken out of wheat
to provide grass for a profitable livestock enterprise. A small acreage
of seeded pasture might provide the necessary supplementary feed so the
existing pasture could be more fully utilized. The minimum acreage for
a profitable livestock enterprise is of special importance if a livestock
enterprise is to be added.

In seeding cropland to grass, several things must be considered. As
a starting point, which acres are losing money under cultivation? Next,
what kind of livestock can or will utilize this grass? The second step
will help farmers decide on the total number of acres needed for a mini-
mum number of animals. Where are the acres to be seeded tq grass?
Can they be easily fenced or are they scattered? Are the acres located
where stock water is available, or can water be developed within the
area to be seeded to grass? What will it cost to fence the pasture and to
provide stock water for the newly seeded area? The Agricultural Stabi-
lization and Conservation office in your county can tell you the amount of
financial assistance that is available to carry out the seeding of cropland
to grass, necessary protective fencing, and needed livestock watering
facilities. Technical assistance as to selection of grass species and
methods of seeding may be obtained from the County Agricultural Agent
and the Soil Conservation Service.

The data presented show the returns from yearlings grazed on seeded
pasture that was formerly wheatland. Other classes of livestock, such






36 -


as beef cows, dairy cows, and sheep, might show larger or smaller re-
turns. Prospective returns from grazing other kinds of livestock on seed-
ed pastures would be calculated in a way similar to that used for year-
lings.

Each class of livestock may be handled in more than one way. For
example, animals could be sold as grain-fat, grass-fat, or feeders.
Many other questions about rental arrangements, feed reserves, and ad-
justments in other 'crops and livestock numbers arise. These questions
are worthy of consideration, but they were not dealt with in the study
reported here.







- 37 -


ADDITIONAL TABLES

Table 16.- Estimated cost of seeding an acre of cropland to grass in eastern Colorado 1/


Estimated costs per acre

Year and item Fixed
SVariable
SNoncash Cash

Dollars Dollars Dollars

First year:
Equipment, depreciation (10 percent of
investment) 2/ ----------------------------------: 0.40 -- ---
Interest on equipment (3 percent of investment)-------: .12 --- ---
Repairs (4 percent of investment)-------------------: --- 0.16 ---
Interest on $60 land at 4 percent -------------------: 2.40 --- ---
Taxes on equipment ( 1 percent of investment)--------: --- .04 ---
Taxes on land (0. 5 percent of value)-----------------. --- .30
Tractor fuel at 40 an hour------------------------- -- --- 0. 56
Labor at $1.00 an hour ----------------------------: --- --- 1.50
Seed, 30 pounds forage sorghum at 2
a pound ----------------------------------------- --- --- .60
Total cost----------------------------------- 2.92 .50 2.66


Second year:
Noncash, same as first year -----------------------: 2.92 --- --
Repairs, same as first year------------------------: --- .16 ---
Taxes on equipment, same as first year-------------: --- .04 --
Taxes on land (0. 5 percent of value) ---------------- --- 30 --
Tractor fuel at 40i an hour-------------------------: --- --- .40
Labor at $1.00 an hour ----------------------------- --- --- 1.15
Crested wheatgrass seed, 8 pounds at 35
a pound ----------------------------------------- --- --- 2.80
Total cost----------------------------------: 2.92 .50 4.35

Third year: 3/
Noncash, same as first year ----------------------- 2.92 _-
Cash fixed costs, same as second year,
with taxes 24 less-------------------------------. --- .26 ---
Tractor fuel at 40 an hour-------------------------. --- --- .13
Labor at $1. 00 an hour ----------------------------. --- ---. 38

Total cost---------------------------------- 2.92 .26 .51

Total cost for first 3 years -----------------: 8.76 1. 26 7.52

I/ Based on 320 acres seeded to grass, and using 1954 prices.
2/ Investment in equipment is $1, 273.
3/ After the third year, only the taxes are considered. Taxes are assumed to be 6 cents
the fourth year and 15 cents a year thereafter.








Table 17. Annual costs and returns per acre for cropland seeded to grass with and without Soil Bank, when first seeding
fails and when it is successful, 12-year period, eastern Colorado 1/

SFirst seeding successful First seeding a failure
: Without Soil Bank : With Soil Bank : Without Soil Bank : With Soil Bank
Yea :Value of: Cash expense : : Gross : :Value of: Cash expense : : Gross :
Yea: beef : Live- : Land : Net : pay- : Net : beef : Live- : Land : Net : pay- : Net
:produc-: stock : and : return : ments : return :produc-: stock : and : return : ments :return
: tion : c : tillage : : 2/ : : tion : sc: tillage : : 2/
Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars Dollars

1st (cover-crop year)--: 7.00 1.92 3.16 1.92 7.00 3.84 7.00 1.92 3.16 1.92 7.00 3.84

2d (seeding year) ----: 0 0 4.85 -4.85 10.64 5.79 0 0 4.85 -4.85 10.64 5.79

3d-------- ---- 0 ,77 -.77 7.00 6.23 0 0 .77 -.77 7.00 6.23

4th------------------ 3.28 1.01 .06 2.21 7.00 6.94 3/ 7.00 1.92 3.16 1.92 7.00 3.84

5th------------------ 4.92 1.41 .15 3.36 7.00 6.85 0 0 4.85 -4.85 10.64 5.79

6th------------------ 5.74 1.62 .15 3.97 0 4/ 3.97 0 0 .77 -.77 0 4/-. 77

7th------------------ 6.56 1.82 .15 4.59 0 4.59 3.28 1.01 .06 2.21 0 2.21

8th------------------ 6.56 1.82 .15 4.59 0 4.59 4.92 1.41 .15 3.36 0 3.36

9th------------------ 6.24 1.74 .15 4.35 0 4.35 5.74 1.62 .15 3.97 0 3.97

10th----------------- 5.90 1.66 .15 4.09 0 4.09 6.56 1.82 .15 4.59 0 4.59

11th----------------- 5.58 1.58 .15 3.85 0 3.85 6.56 1.82 .15 4.59 0 4.59

12th----------------- 5.08 1.46 .15 3.47 0 3.47 6.24 1.74 .15 4.35 0 4.35
12-year average---- -- --- --- 2.56 --- 4.88 --- --- -- 1.30 --- 3.98


1/ Computed for a 320-
shown in table 6.


acre unit assuming 1954 prices ($0. 20 per pound for beef cattle) and beef production per acre


2/ Assumed annual Soil Bank payment, $7. 00 per acre for 5 years and $3.84 as 80 percent of seeding cost.
3/ A second cover-crop year.
4/ From this year on, land is grazed and net return is the same as without Soil Bank.






- 39 -


Table 18. Cost of producing an acre of wheat on a 960-acre crop unit,
with 480 acres of wheat seeded and harvested and 480 acres in summer
fallow, eastern Colorado 1/


Item Fuel :Labor :Other :Total
: : :


Preharvest:
One-way---------------------
Chisel-----------------------
Sweeps -----------------------
Chisel-----------------------
Duckfoot--------------------
Rod weeder------------------
Drill--------- ------------
Seed, 30 pounds---------------
Repairs:
Equipment-------------------
Tractor --------------------
Total---------------------

Harvest:
Combine---------------------
Haul----------------------
Total---------------------
Overhead:
Taxes: 2/
Equipment, 1 percent of
investment -----------------
Land, 0. 5 percent of
investment -----------------
Depreciation, 10 percent of
investment------------------
Interest: 2/
Equipment, 3 percent of
investment -----------------
Land, 4 percent of
investment----------------
Total--------------------


Dollars

0.09
.09
.09
.09
.10
.14
.20


Dollars Dollars Dollars


0.23
.22
.23
.22
.25
.35
.50


1.12

.54
.64


0.32
.31
.32
.31
.35
.49
.70
1.12

.54
.64


.80 2.00 2.30 5.10


.07 .20 .64 .91
.50 .20 .39 1.09
.57 .40 1.03 2.00




.37 .37

S.60 .60

3.68 3.68


S--- 1.10 1.10

S -- -- 4.80 4.80
10.55 10.55


Total costs ------------ :


1.37


2.40


1/ With 1954 prices.
2/ Investment in equipment $17, 667, in land $57, 600.


13. 88


17. 65


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