Iowa Farmer Today
12-15-06
Research tackles beef systems
By Gene Lucht
AMES -- One of the questions many cattle producers face is whether to remain in
a traditional beef business or to switch to “natural” or organic production.
There’s no perfect answer, but Iowa State University economist John
Lawrence has done some research for the Leopold Center that offers a few
clues.
Speaking at a recent Leopold Center conference here, he stressed the choice
still may be one of personal preference and what type of production the farmer
prefers.
But, he says from an economic perspective, computer models indicate the choice
more farmers are taking — “natural” or grass-fed and hormone-free — may be
the least profitable of the three general options.
The reason is natural and organic systems generally produce smaller market
cattle. Cattle that are given growth stimulants have larger slaughter weights.
Another problem is if farmers are still spring calving, they essentially get little
growth in a grass-based system during that first winter and that adds to the cost
of production.
Of course, some farmers who move to grass-based systems also may switch to
fall calving, Lawrence adds.
Another factor to consider is the cost of organic feed for an organic meat system.
This system tends to be profitable if a farmer is producing his grain and is getting
a good premium for the meat.
However, from an enterprise approach, Lawrence says it can appear less
profitable when the possible profits from simply selling the grain for a premium
are considered.
In an enterprise system, the model shows conventional beef as the most
profitable system if market prices are paid for inputs.
Natural beef was the second-most profitable, and organic was third.
But, if producers have access to a good natural market premium or can make up
for problems with that first winter of growth there appears to be a profit
opportunity for organic grass or grain fed beef.