MNAGEMENT DECISIONS DURING D1)UGHT PERIODS
ON EASTERN GtEGON CATTLE RANCHES
James Robert Gray
t
OREGON STATE COLLE(
in partial fulfillment of
the requirements for the
degree of
Juno 1957
Redacted for privacy
Associate Protessor ot Agricultural 1ooncmics
In Charge of Major
Redacted for privacy
Head of Department of Agricultural Economics
Redacted for privacy
Chairman
Redacted for privacy
Date thesis is presented March 5, 1957
Typed by June Rdtchings
Wi1
fliviI.)
omios Research Branch, Agricultural Research Service, U. S. Department
of Agriculture.
ship, which enabled the author to complete his graduate program,
including this thesis
The thesis is dedicated to the menory of Mr.
Robert ,Johnaon.
The writer wishes to acknowledge the guidance and assistance of
Several persons in the Agricultural Research Service gave valuable
assistance and advice in the planning phases of the study.
These in
elude Dr. M. L. Upchurch, Mr. Warren a. Bailey, and Mr. Charles W.
Nauheita.
For aid in planning the field survey I am indebted to Mr. Ray
Novotny and Mr. George Rain, county extension agents of Harney and
Malheur counties, respectively.
I am especially grateful to Mrs. H. M. Hutchings for her careful
typing of the final manuscript.
Any deficienctes or discrepancies in
the thesis are entirely the responsibility of the author.
INTRODUCTION.. ii a . * a ease as a a a a a a a.. a, a aea a., a aa a. a a a a, s a *. a
1
The Problem- Eccamic Investigations of i)rought.....,..
1
Drought...,.....a.a..s.a.......
2
a4a .aa4*. *a**0$aaa*a44..0e *óaa
3
Econoata Implications of
Uncert.ainty....,-,,,,
Flexibility.0............
.-.,aal.a,.s,aa.a..a.aa.as
Capa.ta]. Rationing. a . a. a a a. a
Discounting...a..,.....a.a..
a
aaaaaa
a
a a a a . a a. a a a
...s-,40s,*010a*aaeaa.o,
4
5
6
Efficiency Concepts Applied to Western Cattle Ranch
8
Production and C08t Measures Used in This Study.. . a
Market Price VS Opportunity
Coet.a....,...a.a...-...
12
13
The
14
DescriptionoftheStudyArea...,.....,..........,...-...
16
Location..000., a a a a a
a * Oaa.0 a. a a aa**.,0aa0Saa*
Physical Featurea.......,.,........,,......,....,..
Land Ownership., *** ** a a a -a a a.. a a S a a a .00
* a a., a a *S
Ranch 5..ze.,.,,.,,,..,,.....,.,,...,...,..,,,,.,.,.
isce1laneoue Features.., a .a.a., aa...,o.a
16
16
DEFINITIONS, OCCURRENCES, AND PROGRAMS. .. . .. . .. ....
24
Definition, aa a a a Soasa, a- a a a a a a aaaa .*..aaa a .i.a*$,aa..aS
24
Agriculturea..a.aa4.aa.a.,a..
26
Dz'ougbtOccrrenceebyRegions,,-........,...............
28
DROUGHT
Drought Periods in Western
19
20
21
28
30
Great Flains.....,,.............,............,...,.
Southwestern Region.,....................,,........
Interntountain Region......,.........,..............
Eastern Oregon.a.,,,,..-.,...,..s..s.......a........
31
31
Drouglit Programs..........,.......,......,...,.......,,.
33
Crop and Feed Programs..,.....a..aa..a.a aa..a,..,.
Broad-purpose Programs...,,,.,.......,....,........
TechnicalAssistancePrograme...,...,..............
33
35
3?
TABLE OF CONTENTS (cont'd)
Page
Chronology of aflrought Progr'am....................
Livestock?u.rchaseProgramz........................
Current Drought Program...
38
39
40
41
State Drought Programs.,....,.. ........a....a
43
Agricultural Adjustment Acts... .. .. . a...... .......
ê a..... ..a *.
44
Drought and Climate...,.,...................,...........
44
Drought and Planta,............,........................
45
REVW OF LITERATURE...... a. øa .. a ..s a
Drought and Livestock..
I
a, a .a a. sa
48
S
Drought and Management.. .... ., * . .... . a aaS a. .a..aa
50
Drought and Economics.,.................,...............
54
PROCEDURE OF THE STUDY...........,.,.,.............,.........
61
The Population..
..
a a a a a a.. a .-..... a a, .a
a. * *
a
61
Sampling Procedure.,.....,...........,......,...........
61
Collection of Data..,....,..,..,...,..,....,......,,.,..
65
Analyais..,....,,.......,..,..,,...,......,.....,,......
66
Homogeneity of Ranohes...,....,...,...,.................
69
Assumptions... G
a a. a .aa.e....aa
71
.. .. ...
73
Introduction.......,............,....,.1.......,..,...,.
73
Hay Buying strategy... a
75
ADJUSTMNTS MADE DURI
.
a a.... ...aa.
DROUGHT... *. .
a
. ... . . a
.. . .
a. a a a a. . . a a., a. . a a a *a . a a a a a ..a.
. ..a.a.a
79
Herd Reduction Strategjr.......,...,...... ......,..,,...
83
Lease Increasing strategy. ......... ....,..a. a.. ....a...
87
No Change Strategy.........,......,..............,......
90
Comparison of Changes from the Various Strategies...,,..
93
... a...... a.sa
97
97
Concentrate Buying Strategy.. a.
Investments.... a ,*a..,.*a.-a. a
Production., . . a .
a . a a a
a. a e. a. a.,.. * a . , a e a. a a* a.
TABLE OP CONTENTS (cont'd)
Ranch Efticiency...,,.,...,,.,.,..,,...,.....e......
98
98
ALTERNATIVE ADJUSTMENTS DURI1G DROtJGHT.....,.,................
101
Introduction,
..,.. .....,,, . ,,
101
Analysis Procedures.,,,..,,,,,,,..,,.,.,,.,..,,,..,...,,,
102
Gross ProductionofcalfEquivalents....,..,.,..,........
108
Net Ranch Income.,..,, ...,....... ,S*,s,,, a * *1 0* *
110
PRICE VRSUS PRODUCTION EFCTS DURING DROUGHT..,.............
114
Introduction..-,.. ..,a.,.....
Iesa.a*Ig...s4s,a*e.IIa
114
Hay Buying Strategy.........,,,....,.....,.........,....,.
11.4
Concentrate Buying Strategy.. .a. ,ø.,...,........,. .ia*S
116
Herd Reduction Strategy,,.....,,,.,., saaa-aaasaaa*,**
118
Lease Increasing 5trater,,,,,,,,.,,,...,,...,,.,,,,,,.,,
120
No Change Strategy. .
120
. , ., . . ,, ..
Comparison of Strategies.,.., *e0
* ,
. , alaS . *** I I ..,I
S
123
EPYECTS OP SEVERE DROUQHT..,....,.,-,,,..,.,...,.,,,,....d,.....
126
Xntroduction....,....,,..,.........,.,,.....,,...,.,..,,.
126
Procedure Ijeed, ,
-. .,a.
127
Severe Drought gffects,,,.,.,.,., .,... ..,...,..........
129
Comparison of Drought Effects on Eastern Oregon
Cattle Ranches,,,.., ,,,. .,,,,. ,,
a,
a a.,
*...
131
CarryoverEffectsofDronght.,...,....,,.,......,..,.....
133
5* a**5 S * * 5*5
*
S *15 *
-, . ... 5.. a, .. , .a.a a a.. .*ø a. ..***.e.
SUMMARY AND CONCLUSIONS.
a
0*
135
8wnary.,..........,,.,,..,.,,,..,,,,,,,..,..,.,.,,,,,,,.
135
a. S Ssa a5 51*-a,.. 10 4-al a
*' *5*1 5-
The Hypothesis,, .. , . . .... ., . .-. ....,. . .
Drought Defined.-. , **' a a S *l**
a *sa *0 0 a as
Drought Occurrences.,.,,.., a,,.,.
.. . . 1s a.
e0 ** a a,..
a...,
335
135
135
TABLE OF CONTENTS (cont'd)
Drought Programs. . .. ...
. a a . a a. a a. . . a.. a
S a
e a*
Drought Literature.....,..,a,.,.......,.a,.a....a.,...
Study Prooerlux'e...,.....,........,.........,,,,,..,...
Comparisons of Drought Strategies...........,,........
Effects of Alternative Strategies.........,...........
Price VS Production Effects During Drought............
Effects of Severe Drought.,.....,,...........,........
Conclusions. ..
a..,, .a a ,. a,.
136
136
137
138
139
140
141
a a a a a. a a a ..a.
143.
BIBLICGRAPHY.........,,.,, a.,...a...,..a,.*a,*-. a .,.e.a..a.a,.a aa
144
APPENDIX I - PRODUCTION AND DISCOUNT REL.ATIONSI4fl'S..............
147
APPENDIX II - CALCULATION OF PRODUCTION COFFICIENTS AND
BUDGETS.a.aa...,a.e..,...a.-a,...,...a,..eaa.a......,e..,,....,
150
APPENDIX UI - PRICE AND PRODUCTION EFFECTS DURI}X
157
APP1NDIX IV - RANCH DATA:
.
a ,. a a a a a.
AVERAGES FOR FIVE $TRATEGY
159
LIST OF TABLES
Page
Table
1
2
3
4
5
6
November Through October Precipitation Totals and
Total Departures from Normal in Southeastern Oregon
and Adjoining Areas.... .. . .... .. .... .... ... . a a* a a .....
34
Results of Analysis of Variance of the Three Major
Drought
70
Financial Statement, Representative Ranch Budget,
HayBuying Strategy, Eastern Oregon...,................
76
Measures of Productivity and Costs, Representative
Ranch Budget, Hay Buying Strategy, Eastern Oregon.......
78
Financial Statement, Representative Ranch Budget,
Concentrate Buying Strategy, Eastern Oregon.........,...
80
Measures of Productivity and Costs, Representative
Ranch Budget, Concentrate Buying Strategy, Eastern
a a... . a.. a a
82
Financial Statement, Representative Ranch Budget,
Herd Decreasing Strategy, Eastern Oregon................
84
Measures of Productivity and Costs, Representative
Ranch Budget, Herd Reduction Strategy, Eastern Oregon...
86
Financial Statement, Representative Ranch Budget,
Lease Increasing Strategy, Eastern Oregon.. a... *
... ..
89
Oregon........ a .a sa..a....a.. .sa.aas...as...s..........
91
Oregon. ...
7
8
9
10
U
12
1.3
14
. . .. a. a .5 as a. a
s s a. a a....
Measures of Productivity and Costs, Representative
Ranch Budget, Lease Increasing Strategy, Eastern
Financial Statement, Representative Ranch Budget,
NoChangeStrategy,Easternoregon....,.......,..,......
92
Measures of Productivity and Costs, Representative
Ranch Budget, No Change Strategy, Eastern Oregon........
94
Comparison of Changes in Financial Statement,
Representative Ranch Budgets, 1953 to 1955,
Eastern Oregon........,..,,..,.................,,....,..
95
Comparisons of Changes in Measures of Productivity and
Costs, Representative Ranch Budgets, 1953 to 1955,
Eastern Oregon,..........,...........,..,......,..,.....
96
Table
15
16
17
18
19
20
21
22
23
24
25
26
27
LIST OF TABLES (cont' d)
Page
Resource Limitations Under Alternative Strategies,
Eastez'nOregonCatt1eRanches......,.....,............
103
Resouz'ce Requirements in 1955 and Changes from 1953,
EasternOregonCattleRanchea..,........,.............
105
Gross Production in Calf Equivalents with Original
Strategy and First and Second Best Alternative
Strategies, Eastern Oregon Cattle Ranchos....,.......
109
Net Ranch Income with Original and Alternative
Strategies, Eastern Oregon Cattle Ranches...,.....,...
UI
Price and Quantity Changes During Drought,
Representative Ranch Budget, Hay Buying Strategy,
Eastern
113
Price and Quantity Changes During Drought,
Representative Ranch Budget, Concentrate
BuyingStrategy,EaaternOregon...,......,..1,.......
117
Price and Quantity Changes During Drought,
Representative Ranch Budget, Herd Reduction
Strategy, astern Oregon..............................
119
Price and Quantity Changes During Drought,
Representative Ranch Budget, Lease Increasing
Strategy, I.astern Oregon..... .........,..............
121
Price and Quantity Changes During Drought,
Representative Ranch Budget, No Change Strategy,
Eastern Oregon...........,.,...,.....................
122
ComparisOn of Price and Quantity Changes During
Drought, Representative Ranch Budgets, Eastern
Oregon............ ...,. ,,e...... ....,... .......,....,
124
Comparison of Production, Resources Used, and
Precipitation, Northern Great Plains and Eastern
Oregon Cattle Ranches, 1953 to 1955.........,.........
128
Estimated Production Effects on Net Ranch Income in
Severe Drought, Eastern Oregon Cattle Ranches..,......
130
Comparison of Estimated Production Effects in
Nornal, Moderate Drought, and Severe Drought
Periods, Eastern Oregon Cattle Ranches.....,..........
132
LIST OF TABLES (cont'd)
Table
28
29
30
31
32
33
34
35
36
37
38
39
Calculation of Production of Hay Buying
Strategy with Original and Alternative
Strategies, Eastern Oregon Cattle Rariches...,..........
151
Net Income Estimates of Hay Buying Strategy
with Other Alternatives, Eastern Oregon Cattle
Ranches.,.,.,.,.,.,.....,,...,.,.,...,..,,.,,.,.,,,.,.,
155
Financial Statement, Averages of Seven Ranchos in
the Hay Buying Strategy, Eastern Oregon................
159
Measures of Productivity and Coats, Averages of
Seven Ranches in the Hay Buying Strategy, Eastern
Oregcn......,.,....,.,,..,.,,,...,,,.,..,,..,....,.....
160
Financial Statement, Averages of Seven Ranches in
the Concentrate Buying Strategy, Eastern Oregon.,......
161
Measures of Productivity and Costs, Averages of
Seven Ranches in the Concentrate Buying Strategy,
Eastern Oregon,.... ... a a a s ,s a.. a.. .. . a s . .. e
. ...
162
. .,...
163
Measures of Productivity and Costs, Averages of
Five Ranches in the Herd Reducing Strategy,
Lastern Oregon.......,...,........,...............,,...
164
Financial Statement, Averages of Five Ranches in
the Lease Increasing Strategy, Eastern Oregon..........
165
Measures of Productivity and Coats, Averages of
Five Ranches in the Lease Increasing Strategy,
Eastern Oregon...,,....................................
166
Financial Statement, Averages of Nine Ranches in
the No Change Strategy, Eastern Oregon.................
34?
Financial Statement, Averages of Five Ranches in
the Herd Reduving Strategy, Eastern Oregon... ....
Measures of Productivity and Costs, Averages of
Nine Ranches in the Mo Change Strategy, Eastern
168
LIST OF FIQUEES
Page
1
Location of Study......,.,..,.,,,.,,.,,.,..,.....,,.,,..,
17
2
Distribution or Size of Grazing Permit, Harney and
Maiheur Counties, Oregon...........
63
3
Production and Discount Re1atianships..,......1...,......
148
MANAGEMENT DECISIONS DURING DROUGHT PERIODS
ON EASTERN OREGON CATTLE RANCHES
INTRODUCTION
The Problem - Econnjc Investigations of Drought Effects
Drought has two main effects which concern ranch operators.
The
first of these is the obvious one of a curtailment in production.
The secood is less obvious
It is the change in prices of products
produced and of items bought and used in produot&on.
l3oth effects
work together to affect the returns from range cattle operations.
In the western raige area, defined as the area west of the 20-
2
Eooncmiic Implications ot Dright
or weeks have not been successful.
To qualify as a risk situation, future precipitation and its
effects on future forage production nnst be predictable and insurable.
Neither situation exists under present technology and institutions.
The remaining situation of uncertainty, therefore fits the probl
of
adjusthents to an uncertain future.
Uncertainty
The uncertainty in agriculture is caused by at least four types
of variations. 'These are variations in prices, yield, technology, and
stitutione,
The concern of this study is primarily in the realm of
uncertainty caused by weather effects on price, yield, and technology.
There are two main types of reaction to an uncertain situation.
period of years to net, Lu the judgement of the operator, the
specific requirements for a particular combination of range resources.
Unlike a crop enterprise, the operation cannot be temporarily
terminated.
Should liquidation of the breeding herd take place, the
operator loses the characteristics which have been laboriously fixed
in the herd.
Expressed in another way, ranchers have invested their herds
with a particular set of characteristics
The coat of the Culling
progran which has made these characteristics possible hao been borne
over a period of years.
Individual breeding stock therefore has. a
value to part&cular ranchers in excess of their market value.
These
Flexibility
An alleviating factor to the rigidness of the range Uveatock
enterprise is the flexibility which some ranchers build into their
Capital Rationing
The above discussion assumes that the capital positi
of ranchers
ts such that they are in a position to make decisions to decrease
the herd or continue to operate despite returns exceeding only variable
costs.
ttost ranchers have sufficient equity in their operations to
make this decision.
Rationing of capital by most ranchers is inter-
nal during periods of abundant range forage production.
That is,
ranchers do not borrow as much capital as loaning agencies would like
to loan to than despite a high level of productivity during these
favorable periods.
(A few rancher8, particularly those who are new in
the business or the confirmed optimist anxious to expand as rapidly
The discount rate, that is the rate at thicb both operators and
Loaning agencies have discount rates during periods of nonal
range forage production that are lower than the operator who is
rationing his own credit.
when a drought occurs at least three
7
factors tend to increase the discount rate faster for loaning agencies
than for operators.
First, the risk of bankruptcy increases for the
operator becanse of lower equities.
Loans are less secure.
Second,
the increasing demand for funds exceec a relatively decreasing supply.
Third, alternative loans which before the drought were lees desirable
than ranch loans become relatively sore attractive to loaning agencies.
A special case exists during extreme drought.
Facing certain
changes in capital rationing from norual to drought periods.
During
normal periods the operator has a higher discount rate than loaning
agencies.
As money is less valuable in the future to the operator than
the loaning agency, the operator rations his credit.
During drought
periods, although discount rates for both the operator and loaning
agencies increase, the effective rate is higher for loaning agencies.
In this situation the agency rations the operator.
Efficiency Concepts Applied to Western Cattle Ranch Management
Many values are used to measure the efficiency or lack of efficiency of ranch managers.
The more common nasures are calf crop
percentages, calf marketing weights, hay crop yields, and range carrying capacities.
These measures des]. with physical quantities of
livestock numbers, livestock weights, crop yields, and grazing rates.
They have at least one serious limitation in measuring ranch efficiency.
They are measures of production which ignore cost and price.
To illustrate, a calf crop percentage of 90 percent appears more
favorable than one of 80 percent.
However, if the cost of the addi-
tional 10 percent of calf crop exceeds the value of calf produced,
the lower production figure may be more efficient from the standpoint
of net returns.
The higher value is more favorable only if coats are
comparable, once again from the standpoint of net returns.
Another group of efficiency measures is the financial measures
of efficiency,
These include net cash income, net ranch income,
return to capital, and return to operator for labor and management.
As is the case above, several limitations must be imposed on these
measures.
Size or scale of enterprise is not indicated in these
measures except in a general way.
Adjoining ranch operators may have
equal net cash incones or net ranch incomes.
encies would appear to be equal.
Their ranch effici-
3ut one ranch may require twice the
amount of resources to produce a given level of net income.
Return to capital is very deceptive in this respect of hiding
the size of enterprise.
Adjoining ranchers may be realizing eight
percent return on their investments.
o1 $800 on a $10,000 investment.
on a $100,000 investment.
One rancher may realize a return
The other may have a $8,000 return
Despite the difference in size of enter-
prise, the return on both investments is eight percent.
Price level changes lessen the value of the financial measures
with inpits and outpits.
Inputs are the resources used in production.
Outputs are the products produced.
Output per unit of input, or the
value of production per unit of resources used, is the basic measure
used in this study.
The advantage of this measure is that it inci3xdes all products
products.
In this case changes which take place in the values of
products produced from 1953 to 1955 are clue to factors other than
changes in prices.
Cae serious limitation of the measure, the value of production
The
per unit of resources used, involves the concept of marginality.
measure does not deal with the last unit of product produced (the
marginal product), but rather deals with the total product
As a
result, the contribution of the first unit of resource used is assumed
to have an effect equal to the last unit used.
Actually, under
normal circumstances, the first units contribute more to the total
product than the last group of units.
Another difficulty in the measurement of efficiency is the
valuation of certain outputs and inputs.
This difficulty, however, is
not peculiar to the measure used in this study.
For example, the value
discussion of ranch efficiency would not be complete without
a definition of economic efficiency. This measure is not used in
this study.
Economic efficiency may be defined in two ways. In terms of
opportunity cost (definect on page 13), optimum economic efficiency is
achieved when the value of the marginal product of each productive
service equals its opportunity cost.
The general formulation of economic efficiency is:
MVPX1
MVPX2
MVP
..,,,,..
pxl-Px.2
Fx
where MVPXi
n
is the marginal value product of the input x, and P
is the price of
the input. Optimum economic efficiency occurs when the above formula
is equal to 1.
that no concixsions can be made concerning these responses. Green-
house experiments have shed considerable light on the ecolor of plants.
However, the variables are so large in number, so difficult to duplicate completely, and the interaction so complex that progress in this
field is extremely slow.
An additional and important difficulty in accurately measuring
the value of production per unit of resource used is the lag of livestock production behind range forage conditions. Changes in livestock
production tend to lag behind changes in plant production and vigor.
(Also, livestock production depends on many other variables,) To the
complexities of plant response to environment uaist be added a new set
of variables, that of animal response to changes in range forage
production.
Production and Cost Measures Used in This Study
13
Market Price VS Opportunity Cost
In the strictly economic realm, one difficulty in using the above
measures has been the use of market price rather than opportunity coat
in calculating values.
The advantages of using market prices are that
they are consistent within the various categories of the enterprise,
they draw attention to items which are important in the total coat
scheme, and they permit relatively simple calculations of value
The
disadvantages of using market prices are that thoy may not reflect
opportunity costs.
Prices may not reflect opportunity costs because
of market factors, including short tern variations because of supply
and demand changes, monopolistic restrictions, governnient pricing
policies, and personal likes and dislikes of both buyer and seller.
Opportunity costs reflect the value of cmodities when the
eceanodities are used in their next best alternative.
That is, if a
ton of hay will produce either $27.00 worth of veal or $24.00 worth
of beef, with beef being the best alternative other than veal, the
opportunity cost of producing veal is
24.0O.
The cost of producing
$27.00 worth of veal is that of foregoing the production of
worth of beef.
The difficulty
in
24.00
using the price of 24.00 is that
ranch enterprises are not on a systemized experimental basis.
If
the decision is made to produce veal, hay is used for that purpose
and the production of beef remains hypothetical.
The opportunity
cost must be estimated.
The Hypothesis
The hypothesis which is tested in this study is:
Decisions that
ranchers make in response to short-run changes in forage production
during a moderate drought period are not equaUy effective in &chieving desired resitlta because of production and price changes.
The hypothesis of this study is tested as follows:
The decisions
Description of the Study
a
Location
The area of this study is Harney and the sontharn half of
Maiheur counties, Oregon.
See Figure 1.
extreme southeastern corner of the otate.
These counties are in the
ktarige cattle production
and the extensivs land use associated with this type of enterprise is
the dominant type of agriculture in the area.
Although Maiheur
County is noted for its production of irrigated crops, the intensively
farmed areas in the northern half of the county were excluded.
Physical Features
17
Figure 1.
Location of Study
Scale of Miles
6
2
50
7'S
iôo
of herd, the size or grazing permit in this area, particularly in the
smailer and middle ranges or herd size, is considered an accurate
index or size or operation.
aanch Size
46 percent of the range cattle operators hare 79 head or less.
If
the next size of group in the Southwest were di'rided equally,
approximate1y 52 percent of the operators had less than 100 head,
Miscellaneous Features
CHAPTER II
DROU}IT
DEFINITIONS, OCCURRENCES, AND PROGRAMS
"8eriou1y" appears to beg the issue of concreteness. Hower, until
degrees of reaction to lack of soil moisture can be quantified in
terms of other than short-term plant responses, the definition cannot
be made more definite.
To do so would be to fail into the crror of
Great Plains
The Grat Plains was selected for regional discussion because
most is known about droughts in this area.
Six general periods can
be determined from an 8O-y-aar precipitation record of the Great Plains.
Annual precipitation from 1880 through
1905
was generally below
normal, from 1906 through 1916 above normal, from 1917 to 1930 about
normal, from 1930 to 1939 below normal, from 1960 to 1949 above normal,
and far the last six years, 1950-56, generally below normal. Rurtt
ooncbtded that drought occurred in the northern section of this
region once in every five years
9, p.3).
The outstanding characte
istio of thepe records has been the tendency of wet and dry years to
group together. The length of the periods has not been consistent,
which precludes any conclusions that cycles occur.
A more systematic classification has been used by Tannehill in
his attempt to relate Great Plains precipitation with the location of
the Pacific High Pressure Area (34, p.108). Using rainfall values
at North Platte for the 58-year period 1886-1943, he classified 12
years as Class A (Rainfall 105 percent plus of normal), 3]. years of
Class B (95 to 105 percent), and 15 years of Class C (less than 95
percent). The study is interesting because of the l2:1 ratio, or
about one year high, two years tdium, and one year low in terms of
precipitation using this classification.
The years in which droughts were publicized for this area have
30
Using precipitation records of the period 1899 to 1933, the U.S.
Southwestern Region
Although white settlements have existed in the Southwest since
about 1620, precipitation records have been accuimilated in only the
past century.
A drought was in progress from 1888 until about 1895.
From that date until the nineteen-forties, precipitation varied about
the normal without definite concentrations of surplus or deficit
years
However, in this arid area, even one year eubstanttally below
normal resulted in a drought.
Mexico indicate
The precipitation records of Mew
such years occurred in 1899, 1893, 1903, 1910,
1917, 1922, 1924, 1934, 1945, 1947, and 1950 through 1956.
It is
interesting to note that in only one year (1934) during the nationwide drought, 1930-39, precipitation was substentially below norma3.
in this area.
In fact, tour years were substantially above normal
and the remaining five years within ten percent of the long-tine
31
average.
In terms of the concentrations of wet and dry years, the
northern Great P1ain
and the Southwest usually appear to vary in
the opposite direction.
Intenuntgin Esgion
The Intermountain Region, like the Southwest, experienced below
norma). precipitation from 1886 until about 1905.
Thereafter until
1930 the amounts which fell were less than the long-tine average in
only six scattered years.
The Intermountain kegion precipitation
- totals during the nineteen-thirties were typical fox' the nation,
with one exception.
Cne of the severest deficit years, 1936, was a
year' of heavy prectpitattoa in. portions of this region.
Eastern Qx'egon
One of the earliest precipitation records in eastern Oregon is
that of Fort Harney.
of the study area.
until 1879
This station is located on the northern edge
The reports started in 1867 and were continued
These precipitation totals, although of a short 12-year
duration and because of their brevity, difficult to analyze, indicate
an extremely serious drought occurred in. 1868-73.
one year,
in
Precipitation in
1870, was only 4.54 inches, or 42 percent of the 12-year
average.
Mo stations in southeastern Oregon reported precipitation from
reporting service, of which one division was eastern Oregon.
The
first decade of this area-wide series indicates periods of deficient
rainfall occurred in 1890, 1895, and 1899.
However, the decade was
generally favorable.
A serious drought occurred in eastern Oregon during the first
Oregon was not as severe as the period 1900-09 either in number of
years below the long-time average, driest year, or average for the
decade
The year 1939 was the driest of the ten, closely followed
by 1930 and 1935.
The discrepancy between precipitation records end
iblicized reports of hardship is easily explained.
area was sparsely settled.
In 1900 the
By 1930, most of the area had been settled.
Using the economic definition of a drought, the 1900 period was not
serious while it was in 1930.
The decade of the nineteen-forties was very favorable, with only
1949 being exceptionally dry.
In this respect, eastern Oregon
precipitation records vary similarly to those of the Northern Orsat
Plain8.
In the period covered by this study, the year 1953 was approximately seven percent above normal, while 1954 was 17 percent below
33
At Lirat crop and teed or seed loans were oZ osrriding
import.ance.
The first of those were made in 1918, primarily to aid
in the production of wheat for the war effort.
Subsequent t
initial grant, loans were authorized at frequent intervals
in
this
76.5
10.02
-.23
11,21
-5.36
9.29
-1.28
6.79
4.64
11.48
-2.65
12.27
-1.18
8.17
-2.81
7,77
-4.10
-2.75
5.4,8
-3.32
-1.40
6.54
-3.17
-3.83
8.91
-2.09
1.00
9.36
-2.17
107.29
-33.00
:
-23.29
83,4
117.01
12.4
7.17
8.31
6.04.
11.10
.12
8,57
-3.30
-4.85
1.14
-3.09
-2.75
-3.01
-.57
8.60
15.27
8.35
7.82
13.56
9.68
:
:
:
10,12
2.11
1.05
-1.75
-1.22
107.2
150.51
13.65
12.05
7.96
7.58
12.21
1.23
16,55
4.68
.58
1.75
-1.28
.96
-.32
2.33
In.
:
14.03
15.88
10.16
11.53
16.27
1264
.
normal of Percent
Total
Ore. Falls, Valley
Nev. Sheldon,
Ore. Voltage,
Ida. Falls, Swan
Ore. Butte, Squaw
Ore. P-Ranch,
Nev. Owyhee,
Ore, Lalcev.tew,
Ore. Diamond,
Ore. Banner,
Cal. Bidwell, Ft.
Ox's. flurns,
:
Depar- Total
1953
:
bepar-: * Total
Total
19
1954
:
Station
Areas Adjoining and Oregon
Southeastern in Normal from Departures
Total and Totals Precipitation October Through November
1. Table
35
The drought of the nineteen-thirties caused such widespread
distress that the loan progrc
country.
iias broadened to include the entire
The name was changed frost the original "seed" to "crop and
feed" loans.
Until thi8 drought the number of farmers participating
in the loan program never exceeded 50,000 in any one year.
439,000 farmers were included
in
the program, and by 1933 the number
had increased to 634,000 (2, p.176).
The total amount loaned in-
creased from 6 million to a peak of 64 million in 1932.
as much as
In 1931,
Although
2,000 was the authorized maxiimam in 1929 and 1930, the
average size of loan did not exceed
270.
In 1934-35, the catastrophic drought coincided with a major
37
Technical Assietance Progra,aa
Administration.
The agency was abolished in 1946 and the Farmers
Home Administration was created.
Agricultural Adjstment Acts
The Agricultural Adjustment acts of 1933, 1936, and 1938 were
not enacted primarily because of drought
Their enactment was a
direct result of the depression of the nineteen-thirties.
However,
drought did influence some of the provisions of these acts, part.icu-
larly the Act of 1936.
The acts themselves cannot be classified in
one or another of the drought aid programs - they were too broad.
The original Act of 1933 reflected the concern of legislators
39
Livestock Purchase ?rggrams
were noteworthy in that only 12,482 head were sold under the program
in that year, which was 10.1 percent of the 1934 inventory.
percentage value was the lowest of the 16 western states.
This
Of the 10
far western states, New Mexico sold the highest number of cattle.
Montana was highest with respect to proportion Of annual inventory
sold.
The average price
13 .40.
r bea
of cattle in the program was
The Oregon price of $14.77 was third highest in the 16
states, being exceeded only by Nevada and California.
Current Drought Program
The drought now in progress (starting in 1944) resulted in loan
expenditures by the federal government of amounts varying from $20
million in 1951, to $43 million in 1953, and to 8O million in 1956.
It should be pointed out that these loans were made for drought
disasters as well as other types of disasters, with flood disaster
loans being a good example.
The drought portion of these loans was
made primarily for cropland preparation to prevent soil erosion and
for purchase of feed for breeding livestock.
Loans are authorized by
the Secretary of Agriculture in areas where a production disaster has
caused a need for agricultural credit not. readily available from
commercial banks, cooperative lending agencies, or other responsible
sources.
Such areas are deaiiated by the President and in 1957
included most or all of the states of New Mexico and Texas plus about
550 counties in other states.
In 1955, llarney and Maihour counties
were included in the listing of drought disaster counties for that
year.
42
State DrQUgJIt Prorarns
State dright programs, so Zar as can be determined, consist
CHAPTER in:
Drought and Climate
45
much greater use of weather forecasts in scientific agriculture in
the future (9, p.39).
A 8pecial type of weather pr.diction stream flow forecasts and
watershed yields, j
future
accurate and oLtei considerable promise for the
For those operators with croplands depending on spring
runoff for soil moisture (including ranchers in eastern Oregon),
these forecasts could be of considerable value.
Their ialue depends
on how quickly and accurately forecasts of this type can be made
for the smaller watershed such as thos. of eastern Oregon.
Drought was defed in Chapter ii.
Dright and Plants
made by Pool.
In a drought in Nebraska in 1913 he reported that the
period of vegetative growth was shortened, the plants flowered
earlier than normal, and leaf fall was observed as early as July
(30, p.861).
4?
(29, p.22).
His study indicated that changes in vegetation resulted
from the effects of grazing and drought, but it was difficult to
isolate the cause,
The drought of 1946-48 caused no serious change
in the stand of grass where grasses were not injured by grazing.
The amount of growth was reduced each year as the drought progressed.
Pounds of forage available per acre dropped from 767 In 1946 to 135 in
1948.
Precipitation in preceding years was about 21 and 10 inches,
respectively.
Soil moisture rather than precipitation was the ecological factor
in a study in the central Great Plains.
Although precipitation was
only 10.94 in an area where the mean was 24.27 inches, Noll concluded
that there was no relation between precipitation and the production
of vegetation (28, p.505).
Vegetative production was dependent
largely on the water reserve in the soil (Carringtcn silt loam).
Craddock and Foreling's study of the influence of climate and
forage varied from 41 percent above to 33 percent below the 9.-year
average.
They concludd that this variation was largely a result of
the variation in preoipttation during the winter and spring season
(8, p.40).
Changes in forage plants consisted of variation in the
dates on which plants began growth in the Spring, and variation in
In an early study which was subsequently widely quoted, Jardine
concluded that periodic droughts in the Southwest caused heEvy loss
of livestock, low calf crops, and most iiportant of all, it. inter-
fsrred with the building up of the foundation herd.
In his opinion
these were the chief st backs to the cattle industry of the Southwest
(22, p.80)
51.
52
4.
Take this opporltunity to upgrade the quality of the herd by
culling off-type cattle or animals with any other undesirable
characteristics.
When drought occurs several authors have made various recommenda-
I
Miscellaneous recommendations are those of Skeets (33, p.11)
A study in Texas of ranch earnings during drought by an economist
and a range specialist resulted in the following recomiaendatians to
soften the effects of drought (6, p.4):
1.
Balance the stocking rate with the forage
produced. Qraze
only halt of the current year's growth in a normal year.
2
Keep the breeding hort well below range carrying capacity
and make up the difference either with calea and steers
or buying and selling.
54
7,
Practice deferred-rotation grazing.
8.
Use of mixed class of livestock (sheep as weU as cattle)
where the vegetation is suitable.
Hay's study, which includes sociological considerattons, deals
with the relationship between farm population moveients and drought.
He related population movements out of North Dakota to spring wheat
and the local credit situation (14, pp.23-24).
He concluded that
migration was an unsatisfactory technique in providing adjustments to
drought for both the individuals and the area involved (14, p.25).
The moat pertinent study of variations in ranch income and
productivity for the study area is Hochmuth and Goodsell' s study of
commercial family-operated cattle ranches in the Intermountain region.
Precipitation in the study area which included Harriey and
Maiheur counties, Oregon, was ieee than 80 percent of the 1930-44
average in 1934, 1935, and 1939 (17, p.7).
The average weight of
calves sold in these years were 335, 372, and 379 pounds per head,
respectively.
The first two weights were the lowest in the 18 years
for which data were reported.
Because of a rapidly changing price
level, net ranch income fluctuated widely during the drought period.
However, this value was at the lowest recorded level in 1934.
Amounts
of resources used to produce each unit of product also showed the
effects of these drought years.
The values were the highest of the
nineteen-thirties in these three years.
Gross production was lowest
55
in 1935 (17, p.14),
A comparable study was made in the northern Great Plains over a
slightly longer period.
Precipitation was 80 percent or less of the
1947-49 period in the area in 1931, 1934, and 1936 (10, p.98).
Tn
these years net production fell to 67, 48, and 37 percent, respectively.
In the northern Great Plains, a noticeable lag is shown in the
value of production per unit of resources used.
While the index LoU
to 87, 71, and 63 respectively for the three drought years, indexes
for the year following those severe droughts in 1934 and 1936 were
even lower, at 57 and 52, respectively (10, p.100).
Alternative
practices during drought in this area included buying feed, culling
herds, or shipping cattle out of the drought area for temporary periods,
The advantages and disadvantages of each alternative is discus-
sed in some detail (10, p.27).
A third study in this series was made of cattle ranchos in the
Southwest, although the period included in the study was 1mxeh shcrter.
Using the definition of a drought as a year in which precipitation is
20 percent below the long-time average, six years of drought occurred
from 1940-54, and four in the years 1950-54 (11, p.20).
Practices
during a drought wore listed as reducing the herd, leasing addtional
pasture, or supplementing the herd in this year-long grazing area.
To minimize loss the alternatives are to graze consarvatively iii good
years and keep the herd composition flexible by including a number of
calves and steers in the herd (II, p,21).
Theoretical Aspects of Uncertainty with Respect to Clinate
A discussion of economics as it concerns uncertainty aspects
would not be complete without a reference to Knight, whose text Rç,
Uncertainty, and Profit is one of the first and more inport.ant texts
in this field.
pp.239-240).
Ks lists six methods of reducing uncertainty (23,
Those are reduction by grouping, selection of men to
bear it, control of the future, increased power of prediction,
spreading the uncertainty, and directing activity to avoid the
uncertainty.
industry.
The first category has application to the ranching
With a sufficient number of dry years of various intensi-
ties, individual ranchers would be able to estaate the maximum
amount of harvested forage that would be necessary in an extremely
poor year.
In effect, this is the determination of the outside
ranges, or parameters.
The second method is not applicable to ranching.
Insurance
5
standard of accuracy which the individual manager det.x,dnes to be
suitable for a particular occasion.
Baker lists six w&ys to reduce uncertainty (12, p.57).
These
are (1) reduce yield variation, (2) reduce price variation, (3) reduce the ratio of fixed expenses to the total expense, (4k) reduce the
quantity of agricultural resonroes which have to be purchased (external
to the farm), (5) reduce the quantity of non-agricultural resources
purchased, and (6) increase flexibility.
Ualcr'ow discusses the
various types of crop insurance (12, p.76-79) and Pine the tenure
relationships (12, pp.79-1).
Castle investigated the effects of diversification and flexi-
as crop insuranos; grain, feed, and cash reserves; drought credit;
flexible debt and tax parnents; diveraifcation of certain trpes;
larger farms; and price supports (31, ppe94091*3).
CHAPTER IV
The Population
There are approxbnately 350 cattle ranchos of all sizes in the
study area.
An examination of grazing permit records indicates that
about 40 percent of the total number of ranches fall within the group
which has grazing permits of from 100 to 300 head of all cattle six
months of age or older,
Therefore, by limiting the population of
this study to grazing permit size of 100 to 300, inclusive, the total
number is approximateir 140 ranches,
Characteristics of the population are a) range cattle production
A reconnaissance of the area was made prior to drawing the
sun*naiy of the responses indicated that the practices could be grouped
into fire categories.
These were:
a) purchased roughages, b) Pu?-
chased concentrates, c) reduced the size or herd, 4) increased either
range or crop leases, or both, and e) made no particular adjustment.
From grazing use records of the Bureau of Land Manageiient offices
at Burns and Vale, Oregon, a frequency distribution was made of
ranchers in Harney and the southern portions of Malbeur counties,
inclusive, were selected for study.
Interviews of six agricultural
leaders (county agents, federal grazing efficXale, and productive
credit association officials) in the study area indicated that this
was held to be 'the most cmaon size of full-time range cattle
operations.
The names of ranchers having grazing permits falling within the
size limits chosen were tabulated.
County agents, district grazing
officers, and other agricultural leaders identified the major drought
practice of each rancher listed.
A random sample was drawn of the names in each of the five
drought practice groups
Using random numbers, ten names were drawn
for each group and an additional five nauies for use as alternatives.
k
..D
£
ranch
149
199
299
249
41.9
349
399
499
549
599
Size of Grazing Permit (nuMber of A.U,M.$)
(49
99
over
practice Mich the rancher Lndicated ae his maSn solution and the
Collection of Data
over effects of drought.
To measure this drought affect, a question-
naire was mailed in 1957 to each ranch cooperator.
information was reqieeted:
The following
a) number of calves weaned in 1956,
b) average weight of calves sold in 1956, and c) average weight of
steers sold in 1956.
Twenty of the 33 questionnaires were returned.
Techxziçues
The data were sunnarized to permit comp*rions ot outputs and
inputs on each ranch.
drought strategy.
The ranchos were then grouped by the major
Averages were taken of the mea8ure change in
output per unit of input from 19
the gain or lo
to 1955.
This iaeaiure represents
Lor each dollar of resource used in 1955 compared
to 1953.
Total outputs are cash sales, perquisites (value of products
67
the average change in output per unit of input and total inputs, and
adjusted to correspond to those changes.
Wheeler describes three techniques for determining a representative farm budget (13, p.88).
These techniques are cononiy known
as the operating unit, representative farm, or synthesized budget.
They aret
a) a synthesized scale curve based on production functions
or standard performance rates (primarily applicable to the long-run),
b) actual farm business adjusted to the modal, or most conznon, group
(long or short..wr'un), and c) analysis of a eizeable group of farms,
giving full consideration to the known limiting factors, and permitting the farm families concerned to express choices (short-run).
This study utilizes mainly the (b) alternative.
A linear programming technique was attempted in the study.
Four
ltm4tjng resources were listed - capital, feed, public grazing permit,
and meadowland.
Three types of products, or selling activities were
determined as being calf production from ranch-grown feed, from
locally-grown feed, and from non-local teed.
However, it was found
that because of the limited number of products which can be produced
from a cattle ranch, a simple, non-simultaneous solution, rather than
the simultaneous solution or several unknowns (which is the function
of the linear programming technique), is most adaptable to the
analysis.
The purposes of this section of the analysis were to
determine either if a different combination of resources would
increase net returns in each strater selected, or it a different
a moderate drought situation such as the one experienced in the study
area in 1955.
The change in net income because of changes in prices
of items bought and sold normally would not be expected to be im-
portant. However, should severe drought occur, these price changes
are important. High prices for feed, and glutted markets and low
prices for cattle, are common in
a severe drought
area. For this
reason, the inputs and outputs in both 1953 and 1955 were valued on
the basis of the prices paid and received in both 1953 and 1955.
A
series of prices also were used which attempted to account for the
genera]. price level change fran 1953 and 1955, independent of drought
effects. The difference between price changes in the study area and
price changes outside of the area was attributed to the drought.
A final technique was used to project net income estimates of
ranches in
this area into a severe drought situation.
This was done
by adjusting production and quantities of resources used to conform
with range cattle production and resources used in a ranching area
in the northern Great Plains, where estimates are available over a
25-year period,
including
a major drought.
Homogeneity of Ranches
A major difficulty in dealing with a study of a group of farms
is tho variability found among the units
Even when the study is
limited to a small area on a given soil type with a narrow range in
size, variability exists.
The farm organization is an expression of
each operator's desires, abilities, and resources.
among individuals
These vary widely
3ecanse of the nature of cattle ranching enter-
prises, this variability probably is no greater than that of other
types of farm organizations.
Cattle ranchers have fewer alternatives
than many farms arid a much less comparative disadvantage in the
production of beef than most farms.
On the other hand, they have less
control of their resources which tend to be much less flexible than
those of most other types of farming units.
In areas such an the one
studied, where public grazing is connon, expansion of the ranch
enterpse is difficult.
A measure was macis of the variatIon among groups of ranches choos-
ing particular strategies compared to the variation within these groups.
The measure indicated that the variation among strategies was significantly different from the variation within particular strategies.
There was only one possibility in twenty that these differences occurred by chance alone.
For this analysis three groups were chosen - feed
buying, herd decreasing, and lease increasing.
3ee Table 2.
Hay buy-
ing and concentrate buying strategies had about the same result in terms
of change in the value of production per unit of resource used.
These
Table 2. Results or Analysis of Variance of
the Three Major Drought Strategies
Source of variation
Among strategies
d.f,
SS
MS
2
1.267540
.633770
Within strategies
21
2.639848
.125707
Total
23
*Sjgnjfjcant at the 5 percent level (y: 3,47),
F
5.0416*
71
strategies were dealt with separately in the study, however, because
price as well as quantity changes were important in one of the
strategies.
Assumptions
The first major assumption made was that each of the five repro..
sentativo ranch budgets was assumed to reflect the effects of one
of the five drought strategies adopted in the area.
Management,
amount of resources, and quality of resources were assumed to be
approximately equal in 1953.
It was assumed that hay grown locally was limited
It was
was set at ten percent.
Most public grazing permits in the study area are on a community
AU feed raised or purchased was converted to hay equivalents
on the basis of total digestible nutrients in each type of feed.
The effects of severe drought on the representative ranches in
this study, made on the basis of the experiences of ranchers in the
CHAPTER V
Introduction
results of each strategy adopted because of drought.
five descriptions includa set of two tables.
Fach of the
The first table is a
financial description of ranch operations in 1953 and 1955 and the
changes which took place from the earlier to the latter period.
The second table lists several measures of productivity and costs.
These measures have been discussed in Chapter I in the section on
effioiency measures.
The first table in each section lists the total investment for
iLl
75
Hay
*.ying Strategy
Financial Statement
iab1e 3
Representative Ranch Budget, Hay Buying Strategy
Eastern Oregon
Item
Units :
1953
:
1955
:
Change
5,150
1,800
69,025
46,450
16,875
5,700
0
-7,025
-350
-5,425
550
-1,800
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
9,569
7,517
456
1,596
1,476
120
7,241
5,083
428
1,730
1,600
130
2,328
-2,434
-28
134
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Capita]. charge
Dollars
Family & operator labor Dollars
9,941
3,478
37
11,506
5,518
283
2,757
811
77
1,565
2,040
246
2,231
-281
-483
134
193
132
-607
76,050
46,800
Ranch investment
Real estate, Jan 1
Livestock, Jan 1
Machinery, Jan 1
Feed from prior year
Dollars
Dollars
Dollars
Dollars
2,3O0
Total production
Cash sales
Perquisitee/
Inventory change
Feed
Livestock
Dollar's
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other2/
Net depreciation
Net ranch income/
Dollars
526
1,092
6o
439
824
289
3,234
2,940
5,802
573
1,017
421
2,627
2,940
1,302
124.
10
0
-4,500
,/ Products grown and consumed on ranch, including rental value of
farm house.
J Interest on mortgage and loans, insurance charges, bookkeeping
fees, electricity, phone, and building costs.
/ Total production lees cash expenses and depreciation.
77
Value of total production also decreased from 1953 to 1955.
This change was caused by a lower hay crop yield, and smaller quantities
sold and prices received for weaner calves.
Despite the lack of carry-
over of feed, ranchers in this group overestimated the winter hay
requirement.
area.
The winter of 1955-56 was milder than most winters in the
Normally, ranchers of the study area do not buy hay.
Of the 80
The difference of 60 tons
tons bought in 1955, only 20 tons were fed.
was 27 percent of the total amount available.
The hay supply in
1955, including hay purchased, was 32 percent larger than the amount
fed in the normal year 1953.
This margin of 32 percent can be con-
sidered to be a measure of the risk factor used by this group of
ranchers.
Value of total resources used to produce a smaller quantity of
product increased from 1953 to 1955
to the purchaso of 80 tons of hay.
The increase was due primarily
Lower hay yields permitted a de-
crease in the expenditure for machinery arid labor.
Otherwise, the
increased coat is offset mainly by the inventory increase in hay
supplies.
However, after crediting *irchaaed feed for the entire de-
crease in both machinery and labor cash expenses, over 70 percent of
the increase in cash expenses was due to hay buying.
The amount available for family living fell from $5,802 to $1,302,
or 78 percent.
By most standards, the latter figure would be con-
sidered as falling below Schickele' a critical limit of survival
(31, p.933).
The most important measure in the table of measures of productivity and coats is value of production per unit of resource used.
TabIe4. )4easures of Productivity and Costs
Representative Ranch Budget, Hay Thying Strategy
Eastern Oregon
Item
:Units:
1953
: Change
*
.9626
.6293
84.0
410
441
75.8
390
-
-20
-
326
115
1,080
1,010
*70
342
222
-120
200
1.21
200
.64
0
-.57
3.38
4.29
.91
A.U.M.
702
820
US
Ton
Months
.235
.193
--.042
4.2
5.0
0.8
Doliars
Livestock production
Call crop percentages2J Percent
Ca]! sale weights
Pounds
Yearling sale weights
Pounds
et calf equivalenta/ Cwt
A..U.M.s range permit
1955
*
.
Total ranch unit
Production per unit of
resources used
:
.
S
A.U.M.
-.3333
Hay equivalents
avai1ab1e/
Tons
Acres of cropland
harvested
Acres
Yield per acre
Tons
Grazing rate on private
range per A.U.M.
Acres
Feed rates
A.U.4.s of feeding
Hay equivalents fed
per A.0 .M.
Time on feed
/ Number of calves reaching weaning age divided by the number of
cows and bred heifere.
/ Other cattle reduced to calf weights on basis of sale price.
J Other feed, including grains and protein concentrates, reduced to
hay weights on basis of T.D.N. values.
Table 4.
The decrease from 1953 to 1955 was 33 cents on each dollar
of resource used, or a decrease of 35 percent from the 1953 level.
Net ca]! equivalents is a co.nbinatioii of both calf crop percent-
ages and calf sale weights as well as net changes, including inventory
changes, in other classes of cattle.
The decrease from 1953 to 1955
was 26 percent, or slightly more than the decrease in precipitation
in the area (24 percent).
One of the important reasons for the drop in production and the
Concentrate Buying 8trat
Ranch investment decreased by about $4,000 from 1953 to 1955
despite a gain of over $1,000 in the investment value of real estate
and $500 in the value of machinery.
See Tab1e 5.
The investment in
feed, based on the carry over of the previous year, was about constant.
Value of total production fell 25 percent fran 1953 to 1955.
The
depreciation. and expenses cash less production Total /
costs. building and phone, electricity, fees,
bookkeeping charges, insurance loans, and mortgage on Interest /
house, fare
of value rental including ranch, on consumed and groiin Products 3/
1,192
477
900
1,680
1,883
666
6,798
13,085
-252
1,385
-89
1,882
1,624
103
4
3,034
-472
3,150
210
1,832
-4,764
469
-23.
390
1,000
6,350
19,498
55,300
82,148
-4,232
-552
-1,250
-1,802
620
10,115
8,733
2,244
2,878
-1,772
-3,350
-5,122
0
-50
500
-5,742
:L,060
Change
:
1955
:
6,596
2,940
3,506
99
723
498
510
1,932
498
755
4,916
11,461
1,220
2,100
3,320
420
7,871
11,611
1,050
5,850
25,240
54,240
86,380
1953
:
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Units
:
income/ ranch Net
labor
operator and Family
charge Capital
depreciation Net
Othor&'
Taxes
Labor
Machinery
Feed
Livestock
expenses Cash
used resources Total
Livestock
Feed
change Inventory
Perquisitee/
sales Cash
production Total
year prior from Feed
1 Jan Machinery,
1 Jan Livestock,
1 Jan estate, Real
investment Ranch
Item
Oregon Eastern
Strategy Buying Concentrate Budget, Ranch Representative
Statement Financial 5. Table
81
This process is typical of operator decisions during a drought period.
It conforms with the classical advice of preparing for a drought before-
hand by building up teed resources and at least delay herd buildup
until drought has left the area.
The value of total resources used in production increased moderately from 1953 to 1955, 14 percent.
Approximately 75 percent of the
increase in cash expenses was because of the greater feed expenditure.
In 1953 neither grain nor concentrates was bought.
In 1955 5.6 tons
of barley and 33 tons of protein concentrates were purchased and fed.
With increased feeding of concentrates, the rate of salting was nearly
doubled, from 2.4 tons in 1953 to 4.4 tons in 1955.
Despite the favorable position of ranches in this gromp With
respect to feed carryover (70 tons from 1952 and 54 tons from 1954),
net ranch income fell about 72 percent from 1953 to 1955.
Here again
the amount available for family living fell below the critical limit
of survival.
Value of production per unit of resources used decreased from
jl.01 for each dollar of input in 1953 to 0.66 in 1955, a drop of
0.34, or 34 percent,
See Table 6.
Although calf crop percentages
dropped slightly, calves were marketed at heavier weights and apparently
in
better condition,
The price of calves did not change from 1953
to 1955 despite a slight general decrease of cattle prices in the area.
A rather severe drop in yearling sale weights occurred,
Because of
the decreased winter feed supply, yearlings were sold earlier in the
drought year than in the normal year.
Table 6.
Measures of Productivity and Costs
Total ranch unit
Production per unit of
resources used
Dollars
1.0131
.6674
-.3457
Calf crop percentageN Percent
91.7
400
625
87.3
526
580
496
4.4
10
-45
-30
1,300
1,300
0
430
298
-132
300
1.20
300
.72
0
-.48
4.98
5.73
.75
A.U.M.
680
655
-25
Ton
Months
.324
.455
.131
35
3.4
0.l
Livestock production
Calf sale weights
Yearling sale weights
Net calf equiva1ents]
Forage and feed produced
A.U.M.s range pernit
May equivalents
avai1ab1eJ
Pounds
Pounds
wt.
A.U.M.
Tons
Acres of cropland
harvested
Acres
Tons
Yield per acre
Grazing rate on private
range per A.UJL
Acres
Feed rates
A,U.M.s of feeding
Ray equivalents fed
per A,U.M.
Thne on feed
410
/ Number of calves reaching weaning age divided by the number of
cows and bred heifers.
3/ Other cattle reduced to calf weights on basis of sale price.
/ Other feed, inc1udg grains and protein concentrates, reduced to
hay weights on basis of T,D.N. values.
F1rr.uprT!.
refuge permit in 1953 and 1955.
The refuge permit, although based on
the same method of calculating A.U.M.s as the federal grazing permit,
cost $1.00 per A.U.M.
in
both years, rather than $0.12 in 1953 and
O.15 as with the case of the other permit.
Use on both permits did
not change.
Hay supplies, including allowances for purchased concentrates,
Herd seduction Strategy
Ranchers who adopted the herd reduction strategy maintained the
ranch investment from January 1953 to January 1955.
Sf e Table7.
A slight decrease in the investment value of livestock was offset by
an increase in the value of machinery and equipment.
Ranchers had
double the normal nuner of yearlings on hand in January of 1955.
This accounted for the lack of decrease in total investment value of
livestock.
Cash sales increased in 1955 as the yearlings, plus sone breeding
stock and the normal nuner of calves were sold.
The change in the
value of total production was caused by the disappearance in carryover
Table 7. Financial Statement
dget, Herd Reduction Strateg
Representative Ranch
Fastern Oregon
Item
: Units :
1953
Ranch investment
Real estate, Jan 1
Livestock, Jan 1
Machinery, Jan 1
Feed from prior year
Dollars
Dollars
Dollars
Dollars
Dollars
94,775
63,800
25,675
5,300
Total production
Cash sales
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Capita]. charge
Dollars
Family & operator labor Dollars
Perquisitea/
Inventory change
Feed
Livestock
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other&/
Net depreciation
Net Ranch Incm
Dollars
:
1955
:
Change
95,150
63,900
25,000
6,250
0
375
100
-675
950
0
9,995
6,103
570
3,322
2,052
1,270
7,217
11,157
560
-4,500
0
-4,500
-2,778
5,054
-10
-7,822
-2,052
-5,770
11,444
5,737
47
291
1,625
1,111
474
2,189
570
2,617
2,520
11,960
6,453
422
339
1,905
1,111
571
2,105
269
2,718
2,520
516
716
375
48
280
0
97
-84
-301
101
0
3,688
495
-3,193
0
/ Products groin and consumed on ranch, including rental valae of
£ann house.
/ Interest on mortgages and loans, insurance charges, bookkeeping
fees, electricity, phone, and building costs.
/ Total production less cash expenses arid depreciation.
of feed stocks in 1955, as conpareci to a $2,000 carryover in 1953.
Value of total resources used in production increased slightly
in 1955 while cash expenses increased 12 percent frcu 1953.
other cash expense, was a large amount on these ranches.
The item,
Over 75 per-
cent of this item was interest paid on mortgages and loans
Although
more ranchers of this group indicated that sufficient credit was
available in the area (credit rationed int,ernally) than those who were
rationed credit, the equity of the group was only 66 percent in 1955.
Ranchers of this group operate much closer to the point where credit
is rationed externally.
The high interest payment explains the low level of net ranch
income in both years.
The amount available for faadly living and
debt retirement was negligible in 1955.
The ranch efficiency, measured in tense of vao of production
Table 8. Measures of Productivity and Costs
Represitative Ranch Budget, Herd Reduction 8trata
Eastern Oregon
:
Change
Item
: Units :
1953
Total ranch unit
Production per unit of
resources used
DoUars
.8734
.6034
-.2700
92.0
410
88.0
380
525
428
545
353
-4.0
-30
20
-75
1,025
1,152
127
295
224
-fl
250
1.18
220
1.02
-30
-.16
6.49
5,66
.83
A.U.M.
851
871
20
Ton
Months
.213
.257
5.0
.044
0.5
Livestock production
Calf crop percentagesJa/ Percent
Calf sale weights
Pounds
Yearling sale weights
Pounds
Net calf equiva1ents] Cwt.
Forage and feed produced
A.U.M.s range permit
Hay equivalents
A.UJ4.
avai1ab1e/
Tone
Acres of cropland
harvested
Acres
Yield per acre
Tons
Grazing rate on private
range per ASU.M.
Acres
Feed rates
A,U.M,s of feeding
Hay equivalents fed
per A.U.M.
Time on feed
4.5
:
1955
:
/ Number of calves reaching weaning age divided by the number of
cows and bred heifers.
/ Other cattle reduced to calf weights on basis of sale price.
/ Other feed, including grains and protein concentrates, reduced to
hay weights on basis of T.D.M. value3.
Lease I creasing Strategy
This was 3.7 percent of the total authorized,
decreased to 1.1 percent.
By 1955 this percentage
In Harney Cc*mty these percentages were 8.0
and 9.5 percent in 1953 and 1955, respectively,
Some flexibility
does exist in the size of grazing permit LOX' ranchers who are not now
making full use of their permits,
The raflOber8 who chose the lease
increasing alternative were in this group.
The major adjustment made by ranchers choosing this strater was
the leasing of apprornte1y 80 acres of hay oropland in 1954 and
1955,
For one reason or another lands of this type are occasionally
available.
The additions in size of range permits and leased cropland do
not appear in the ranch investment summary.
See Table 9.
Typically,
the change in total investment was because of a change in livestock
values.
cash sales and the carryover of feed from 1954.
yearling heitors were sold
in
Twice the number of
1955 than were sold in 1953.
This caused
the net inventory decrease of about $2,100.
The value of total resources used in production increased lose
than the value of total production, 12 percent as compared to 14
cent, respectively,
per-b
No major changes occurred in cash expenses except
that machinery additions were larger in 1953 than in 1955
Cerise-
quently, net depreciation was negative (purchases exceeded depreciatii)
in 1953
The rental price paid for additional cropland was extremely
low - only about $4.14 per acre.
Financial Statement
Table 9
Representative Ranch Budget, Lease Increasing Strate
Eastern Oregon
Item
Units :
1953
:
1955
:
Change
-2,060
-400
4,275
1,875
740
Ranch investment
Real estate, Jan 1
Livestock, Jan 1
Machinery, Jan 1
Feed from prior year
Dollars
Dollars
Dollars
Dollars
Dollars
74,010
44,700
24,950
3,100
1,260
71,950
44,300
20,675
4,975
2,000
Total production
Cash sales
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
10,594
6,824
626
3,144
144
3,000
12,028
8,251
617
3,160
2,300
860
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Other/
Dollars
Net depreciation
Dollars
Capital charge
Dollars
Family & operator labor Dollars
9,676
4,689
336
984
1,942
390
411
626
-661
2,918
2,730
10,824
5,025
306
1,373
1,442
491
828
186
2,673
2,940
1,148
336
-30
389
500
195
80
202
847
-245
210
6,566
6,817
251
Perquisitee/
Inventory change
Feed
Livestock
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Net ranch income
Dollars
585
1,434
1 ,427
-9
16
2,156
-2,140
/ Products grown and consumed on ranch, including rental value of
fara house,
/ Interest on mortgage and loans, insurance charges, bookkeeping
fees, electricity, phone, and building costs.
/ Total production less cash expenses and depreciation.
feeding period and a 14 percent increase in the daily ration failed
to overcome poor range grazing conditions.
fell 60 pounds per head.
Calf marketing weights
Most of the drop in net calf equivalents
was attributed to these lighter weights.
The increase in acres of croplsnd harvested, which was noted
above, amounted to 39 percent in 1955.
about constant
In addition, hay yields held
These items accounted for practically ail of the
difference between this and previous strategies.
available increased by one third.
The quantity of hay
With fewer units being fed, the
total, amount fed increased from 230 to 252 tons.
The surplus of
available hay in 1955 over the amount needed in 1.953 was 84 percent,
This amount was more than twice the reserve aocwailated in any other
strategy.
No Change Strategy
The only notable item
in
the financial statement of the ranch
which represents the group which made no adjustment to drought was
in the cash expense category.
See Table 21.
Cash sales held about
Table 10. Measures of Productivity and Coats
Representative Ranch Budget, Lease Increasing Strategy
Eastern Oregan
Item
: Units :
1953
Dollars
1.0949
1.1112
.0163
Livestock production
Calf crop percentagea/ Percent
Ca]! sale weights
Pounds
Yearling sale weights
Pounds
95.0
450
695
0.4
-60
Net calf equivalents1 Cwt
533
94.6
390
700
490
1,200
1,350
150
308
424
116
190
1.25
265
1.30
75
.05
4.67
5.69
1.02
Total ranch unit
Production per unit of
resources used
Forage and feed produced
A.U.M.s range permit
Hay equivalen1a
A.U.14.
availablef
Tons
Acres of cropland
harvested
Acres
Yield per acre
Tons
Grazing rate on prIvate
range per A.1JM.
Acres
:
1955
:
Change
5
.-43
Feed rates
/ Number of calves reaching weaning age divided by the number of
cows and bred heifers.
/ Other cattle reduced to calf weights on basis of sale price.
/ Other feed, including grains and protein concentrates, reduced to
hay weights on basis of T.B.N. values.
Itn
Ranch investment
Real estate, Jan 1
Livestock, Jan 1
Machinery, Jan 1
Feed from prior year'
Total production
Cash sales
Perquisitesi/
Inventory change
Feed
Livestock
: Units :
Dollars
Dollar's
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollar's
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Otherf
Dollars
Net depreciation
Dollars
Capital charge
Dollars
Faniily & operator labor Dollars
Net ranch fnccoe/
Dollars
1953
:
1955
:
Change
74,795
43,790
24,925
5,000
1,080
71,510
44,090
20,420
6,000
1,000
3,285
300
-4,505
1,000
-80
10,342
7,921
8,155
7,457
518
180
-900
1,080
2,187
-21
-1,702
-1,332
-370
10,000
4,165
-305
-140
539
1,882
432
1,450
10,305
4,305
288
305
1,400
1,225
-464
343.
53
178
3,302
2,520
461
1,800
245
614
704
-220
3,115
2,940
156
400
-980
28
203
-398
-187
420
5,859
4,210
-1,649
586
503.
/ Products grown and consumed on ranch, including rental value of
fans house.
/ Interest on niortgage and loans, insurance charges, bookkeeping
fees, electricity, phone, and building costs.
/ Total production less cash expenses and depreciation.
93
constant while cash expenses decreased slightly.
Two man months of
family labor were available in addition to the operator's labor in
1955.
This permitted a decrease in the amount of labor hired.
Ranchers who made no adjustment to drought were forced to dip into
their hay reserves, causing most of the decrease in net ranch income.
Value of production per unit of resources used declined 19 percent frcm 1953 to 1955.
Table 12.
Slight to moderate decreases
occurred in all of the livestock production categories
Net calf
equivalents dropped from the 1953 level by about five percent.
A lack of range forage and en adequate supply of harvested feed
permitted the removal of cattle from grazing districts a month early.
Hay equivalents available in 1955 exceeded the amount fed in 1953 by
34, percent.
Although the carryover from 1954 (50 tons) was about
equal to that of 1952, yields in 1955 were down about ten percent.
The carryover in 1955 was slight - only 18 tons.
The grazing rate
on privately-owned ranges was only slightly lighter.
take place,
longer.
One shift did
Fewer animals went onto these ranges and they remained
The bulk of the herd was fed a heavier daily ration for 15
days longer than normal.
Comparisons of Changes from the Various Strategies
Table 12o Measures of Productivity and Costs
Representative Ranch Budget, No Change Strategy
iastern Oregon
Item
: Units :
S
Total ranch unit
Prodiotion per unit of
resources used
Calf crop percentages
Calf sale weights
Yearling sale weights
:
1955
: Change
S
*
Dollars
1.0036
.8155
-.1881
Percent
94.3
430
700
526
94.2
410
695
-0.3.
501
-20
-5
-25
1,098
990
-108
274
248
-26
190
1.33
190
1.02
0
3.51
3.65
.14
Lbs.
Lbs.
Net calf equivalent4/ Cwt.
A.U.M.s range permit
Hay equivalents
1953
AIU.M.
Tons
availableJ
Acres of cropland
harvested
Acres
Yield per acre
Tons
Grazing rate on private
Acres
range per A.U.M.
I7TJ
A.UJhe of feeding
A.U.M.
848
897
49
Hay equivalents ted
per A.U,M.
Tine on feed
Ton
Months
218
4.1
.261
.043
4.6
0.5
/ Other cattle reduced to calf weights on basis of sale price.
£/ Other feed, including grains and protein concentrates, reduced to
hay weights on basis of T.D.N. values.
Item
Hay
Concentrate
-.4,764
-4,500
0
-472
210
4
-50
-2,878
2,244
0
-5,122
-3,350
-1,772
1,624
1,882
-89
1,385
-252
390
-21
469
500
-4,232
1,060
-5,742
: buyin&
:
-.607
134
193
332
-483
-.281
10
1,565
2,040
246
2,231
124
-7,025
-350
-5,425
550
-1,800
-2,328
-2,434
-28
134
: buying
:
:
:
Herd
-3,193
0
375
100
-675
950
0
-2,778
5,054
-10
-7,822
-2,052
-5,770
516
716
375
48
280
0
97
-84
-301
101
tion
x"educ-
/ Products grown and consumed on ranch, including rental value of farm house.
Inventory change
Feed
Livestock
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other
Net depreciation
Capital charge
Fnti1y and operator labor
Net ranch income
Perui8itesY
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
: Units
:
-2,060
-400
-4,275
1,875
740
1,434
1,427
-9
16
2,156
-2,140
1,148
336
-30
398
-500
195
80
202
847
-245
210
251
Increased
: leasing
:
156
400
-980
28
203
-398
-187
420
-1,649
53
-3,285
300
-4,505
1,000
-80
-2,187
-464
-21
-1,702
-1,332
-370
-305
-140
change
No
Comparison of Changes in Financial $tatements, Representative Ranch Budget, 1953 to 1955
Eastern Oregon
Ranch investment
Real estate, Jan. 1
Livestock, Jan. 1
Machinery, Jan. 1
Feed frost prior year
Total production
Cash sales
Table 13.
.043
0.5
.042
0
.044
0.5
.131
-0.1
-.042
0.8
Ton
Months
49
-26
20
-25
118
A1U.M.
.14
1.02
-.83
.75
.91
.05
Acres
0
-.11
116
75
-120
0
-.57
Tons
Acres
Tons
-71
-30
-.16
-70
A.U.M.
5
-132
0
-.48
-115
-26
-108
-0.1
-20
-5
-25
150
-8.2
-20
Percent
Pounds
pounds
Cwt.
127
-.3333
0
-.1881
No
change
-43
:
-0.4
-60
:
:Increaaed
: leasing
-4.0
30
20
-75
Herd
: reduction
;
-4.4
10
-45
-30
-.3457
Concentrate
buying
.0163
:
:
:
-.2700
Ray
: buying
:
Dollars
Units
/ None sold.
/ Other cattle reduced to calf weights on basis of sale price.
/ Other feed, including grains and protein concentrates, reduced to hay weights on basis of T.t.N.
values.
:
Canparison of Changes in Measures of Productivity and Costs
Representative Ranch Budgets, 1953 to 1955
Eastern Oregon
Total ranch unit
Production per unit of
resources used
Livestock production
Calf crop percentages
Ca]! sale weights
Yearling sale weights
Net calf equjva1ents&
Forage and feed produced
A.(J.Ls range permit
Hay equivalezts
available.W
Acres of cropland harvested
Yield per acre
Grazing rate on private
range per A.U.MS
Feed rates
A.U.M.s of feeding
Ray equivalents fed
per A.U.M.
Time on teed
Xtem
Table 14.
0%
with changes involving livestock and the feed and forage supplies.
Investments
The change in the livestock investment indicates that all ranchers
except those adopting the herd reduction strategy had anticipated
drought to some degree either by a) not expanding size of herd, or
b) reducing the size of herd slightly to match the slightly unfavorable feed and forage conditions of 1954. AU ranchers increased
their investment in machinery and equiitent.
Drought did not deter
the de8ire to adopt new techniques, to the extent indicated by this
increased investment.
The change in investment in feed was heaviest
for the hay buying group.
From a position of substantial carryover
of hay in 1952 (100 tons), no carryover was made in 1954.
Production
The change in the value of total production was unfavorable except
for the ranches who were able to adopt the lease increasing strategy.
Production changes in the other strategies were not too mich different.
Changes in cash sales were heaviest for the group belatedly adopting
the herd reducing 8trategy as these ranches reduced herd size to more
nearly match hay supplies.
During 1955, the change in inventory of feed was greatest for the
ranches adopting the concentrate buying strategy, despite purchases of
barley and ccncentrates.
On the other hand, those who were able to
adopt the lease increasing strategy were able to increase the inventory
of feed in 1955.
Notable is the fact that the ranchers who bought
hay did not change their inventory of livestock from 1953 to 1955.
AU units except those of the no change group required more
resources in 1955 than were used in 1953.
Again with this exception,
cash expenses also increased over that of 1953.
The amount spent for
teed, including leases and fees, increased in all strategies, although
the change in the herd reduction strategy was slight.
Changes in net ranch income frcaa 1953 to 1955 were substantial
for units choosing the three main strategies available to all ranchers
in the area.
It should be pointed out, however, that the groups of
ranchers in the hay and. concentrate buying strategies had higher net
ranch incomes in both 1953 and 1955 than the ranchers adopting the
herd reduction strategy.
The reduction was moderate
in
the no change
group and a slight increase resulted when leases were available.
Ranch Efficienq
If it can be assumed that levels of production were approximately
centrate buying was the least efficient strategy during drought and
lease increasing the most efficient.
When the measurements are on a
percentage basis with the 1953 level at 100, the change in value of
production per unit of resources used was least effective for the hay
buying strategy (35 percent), closely followed by the concentrate
buying strategy (34 percent) and the herd reduction strategy (31
rc.
The change in livestock production indicates the hay buying
strategy was least effective in avoiding the effects of drought.
Ranchers who purchased hay or concentrates had the largest
decreases in hay supplies.
Changes in yield of hay were the major
Cause for this change in feed supplies.
A comparison of the informal risk factors of the preceding
the drought conditions early or by fortunate circumstances, had a
comfortable 84. percent risk factor.
The representative ranch budgets indicated that
mo5t ranchers in
each of the categories grazed their privately-owned ranges lighter in
1955 than they did in 1953, with one exception,
Ranchers adopting
the herd reduction strategy grazed their herds on privately-owned
ranges slightly heavier.
However, despite this change, the rate of
grazing on ranches in this group was lighter in both 1955 and 1953 than
the rate of anr other group.
This lighter grazing rate indicates the
ranchers adopting the herd reduction strategy spread their risk beyond
hay supplies to include range forages.
Lighter grazing rates Indicate
they had some flexibility in their grazing program.
The group that bought concentrates increased the rate of feeding
most, while the rate decreased most for those who bought hay.
change in the length of the feeding season was the reverse.
Th.
101
CEAPTER VI
ALTERNATIVE AWUSTHENTS DUftD& 1M)UGHT
Introduction
The purpose of this chapter is to measure azd capare the effoc-
The only alternative which cannot be adopted by all the ranchers
in the area is the lease increasing strategy.
The number and size of
grazing permits are restricted by the Federal land administering
agencies.
The amount or cropland cannot be expanded readily, at
least geographically.
However, some flexibility does exist even in
This study does not deal with meadowland and range improvement
techniques
r
.
However, a study recently concerned with Harney
County does mention these phases of ranch management and discusses in
detail a means of increasing hay yields (27, pp.10-24).
Adoption of
a hay ferUi.izer program would do much toward duplicating the lease
increasing strate' as described by this study.
ing
iñg/
1,080
8,000
114
1,230
8,000
258
1,080
8,000
114
1,300
8,000
216
1,450
8,000
360
1,300
8,000
216
1,152
8,000
224
1,302
8,000
368
1,152
8,000
224
1,200
8,000
195
1,350
8,000
339
1,200
8,000
195
change
No
reas- Inc
Lease
1,200
8,000
217
1,152
8,000
24.6
1,300
8,000
238
1,080
8,000
136
buying/
Concen-.
Herd
trate
iteduc-
1,200
8,000
259
grazing AUMs
(dollars) Capital
(tons) Hay
Increasjng Lease
grazing AXJMs
(dollars) Capital
(tons) Hay
buying entrate
1,300
8,000
260
grazIng AUMs
(dollars) Capital
(tons) Hay
Reducing Herd
1,152
8,000
286
1,080
8,000
178
grazing MIMe
(dollars) Capital
Strategy
Original
buying
Hay
Strategy
Alternative
Ranches Cattle Oregon Eastern
Strategies Alternative under Available Resources
15. Table
104
105
Table 16.
Resource Requirement8 in 1955 and Changes fr
Eastern Oregon Cattle Ranches
Strategy
Limiting resource
Hay
1953
Coefficients in
:
:Percent changes
:
1955
:Arnounte:
Uàing :Using Ranch: 1953 to 1955
ranch : resources :
:
plus
:resources:
strategy:
only
:
:
ying
Tons of hay.1f
178
.4357
Short-tern oapitai3f $8,000 $11.9741
AUMs public grazing
3.0939
1,080
oncentrate
Tons of hay
/
238
.5792
Short-tern capital3! $8,000 $12 .3323
AUMs public grazing
1,300
2.9070
Tons of hay/
.4534
$16 .9056
3.0944
.5989
$13.7195
2.6892
91.14
158.65
93.52
335.45
138.28
100.00
$17.2200
3.2662
134.24
112.48
112.39
.4564
$8.3298
3.1757
109.56
107.17
112.50
.4768
.4768
Short-term capita1f $8,000 $14.9861
AUMe public grazing
2.4330
990
$17.9823
1.9776
124.32
96.75
90.16
224
.6351
Short-tern capital3/ $8,000 $].8.2960
AUMs public grazing
1,152
3.2662
Lease Increas
Tons of hay
339
Short-term eapita1/ $8,000
AUMs public grazing
1,350
No Cbare
Tons of hay/
19].
.5158
$9 .4150
3.1906
.6351
/ Based on carryover of 20 percent (approximately equal to percentage
carryover in the herd decreasing solution).
/ Based on largest short-tern debt in all soLitions (herd decreasing).
ing of probabilities, inability to got eli the information necessary
to construct the budget, and the use of single value expectations.
The first main disadvantage, the canpounding of probabilities, can
be explained in terms of the representative ranch budget.
It five
of eight r3nchee have 200 head of cattle and six of eight value their
cattle at $100 per head, the representative budget would report a
livestock value of $20,000.
However, the probability ot an Individual
ranch in the eight having a livestock value of $20,000 is 5/8
multiplied by 3/4, or approximately 47 percent.
As each factor is
added to the budget, this percentage decreases, or at best remains
constant.
It is se]4om possible to get all the data needed to construct a
Gr083 Production ot Calf Ecndvalents2
367.5f
453.6
412.7
519.5
471.3
210.4W
479.3/
485.7
401.9
353.4/
397.4
: Ccncentrate
:
349.0
Hay
buying
:
:
373.0
283.7W
420.3
354.3/
387.6
352.7
Herd
re:
:
514.9
376.L/
583.7
423.1/
583.7
423.1
Lease
in-
Mo
S
486.0
4O6.9/
505.5
4l6.5/
449.0
400.6
: change
:
If
f Urmed resources are hay, AUMB of public grazing, and/or capital tór operating expenses
hay resource 1 idta production, AIJMa of public grazing and capital for operating expenses are
unused. See Table 2$ in Appendix II.
/ All resources in this case are united to hay, AUMa of public grazing, and capital for operating
expenses. The unused resources are converted to a ccnmon unit (value) and are then expressed as
calf equivalents on the basis of the value of hay required to produce a calf equivalent. See
table 28 in Appendix II.
/ Lease increasing strategy.
Mo change strategy.
/ Hay buying strategy.
Production with second best alternative
strategy, with acme unused resources
Produàticn with second best alternative
strategy, with all resources used
Production with best alternative
strategy, with some unused resources
Production with best alternative
strategy, with all resources used
Production with original drought
strategy, with unused resourceaV
Production with original drought
strategy, with all resources used&'
:
:
Gross Production in Calf quivalente with Original Drought Practice
and First and Second Best Alternative Drought Practice
Eastern Oregon Cattle Ranches
Drought Strategy
Table 17.
The second best altexnative strategy was either the hay buying
Net Ranch Income
The inclusion of costs to detexdne net ranch income changes to
In the concentrate buying group the next best alternative to
lease increasing is hay buying.
Adoption of this strategy would have
increased net income of the original strategy slightly, by about four
percent.
The least desirable strategy in this group is herd reduction.
The hay buying strategy, next to lease increasing, is definitely
superior to the original strategy of reducing the herd.
Adoption of
the herd reducing strategy made litti. difference in net income from
111
Table 38.
Net Ranch Income with Original and Alternative Strategies
Eastern Oregon Cattle Ranches
Alternative
Strategies
:Orjginal drought strategies actually adoted
Herd : Lease :
No
Hay
: Con con-:
:
: buying : trate : reduc- : increa-: change
:strategy: buying : tion : ing
:strategy
: strategy: strategy: strategy:
:Dollars :Dollaz's :DoU.ar's iDoliars :Dollara
Hay buying
alternative
Resources used
Using all resources
rl,459
L -159
1,172
923
1,400
148
905
-3,667
2,579
447
Concentrate buying
alternative
Resources used
Using all resources
42
-2,657
1,121
-93
-2,318
-1,786
-926
-3,639
1,002
477
Herd reduction
alternative
Resources used
Using all resources
824
-2,369
-.U2
-2,119
[-1,268
I-2,5Q7
392
-2,948
1,434
-246
Lease increasing
alternative
Resources used
Using all resources
4,886
1,183
3,595
2,536
2,999
207
No change
alternative
Resources used
Using all resources
401
-2,173
201
-1,343
-1,128
-2,733
787 j
182
-2,560
5,546
2,902
3,377
2,017
/ Using all teed resources, including hay or concentrates, capital,
and unused public grazing permit when any of these three resources
limit production. When reallocation is made, all resources are
converted to the hay resource.
0 Original strategy.
making no change.
Buying concentrates was definitely inferior to any
other alternative, even with the aid of the drought relief program.
Little chance for improvement exists in the lease, increasing
strategy so far as drought practices are concerned.
The limitation
of this drought strategy is the problem of arranging for additional
feed through leases.
Ranchers choosing the no change strategy could not have increased
income by adopting any strategy except lease Increasing.
The hay
buying alternative would have resulted in the smallest loss other
than either of the above two strategies; concentrate buying would have
resulted in the greatest loss.
In this group, no alternative would
hare dropped net income below $1,000.
The hay buying strategy for ranchers originally choosing this
strategy was superior to all, other except the lease increasing
strategy.
The reasons for this superiority are that the severs drop
in roughage production on these ranches in 1955 could not be overcome
by the production of calf equivalents solely from an increase in the
rate of concentrate
feeding
no change alternative.
nor a rate of feeding comparable to the
Reducing
the herd would have cut production
with no Comparable offsetting decrease in ranch operating expenses.
The hay
buying
alternative, for these reasons was superior to both
the original, drought strategies of buying concentrates and reducing
the herd.
The lease increasing alternative was supeor to all other
original strategies chosen because of the extremely low cost of this
Inti'obction
Table 19. Price and Quantity Changes During Drought
Representative Ranch Budget, Hay Buying Strategy
Eastern Oregon
Total change
- .3333
Price effect
- .0383
Resources used (Total inputs)
6
Resources produced (Total outputs)
Quantity effect
Resources used (Total inputs)
Resources produced (Total outputs)
Drought effect on prices/
1].
-33
- .0738
/ Less than 0.5 percent.
/ This amount is the difference between the price change in the
survey area frou 1953 to 1955 and the price change outside of
the survey area for the same period.
Concentrate BUYiIIR StrateEr
almost 35 cents.
Although 14 percent 1es resources were used, pro.
duction in 1955 diminished 49 percent front the 1953 level.
Livoetocic
production was not as important a factor in the decline as the decrease
in hay production.
Changes in price levels outside of the study area made little
difference in the prices paid and received by ranchers in this group.
-', . :i,
:
Cause of Change
Change for each dollar used
in or received front production
from 1953 to 1955
Percent of total :
resources used
;
Dollars
or produced
Total change
- .345?
Price effect
- .0017
Resources used (Total inputs)
- 8
Resources produced (Total outputs)
- 2
Quantity effect
Resources used (Total inputs)
- 14
Resources produced (Total outputs)
- 49
Drought effect on prices/
/ This amount is the difference between the price change in the
survey area from 1953 to 1955 and the price change outside of
the survey area for the sante period.
Herd Reduction 3trate
period. Sante the for
survey
the
of
outside
change
price
the
and
1955
to 1953 fron
survey
the
in
change
price
the
between
the is amount
difference
percent. 0.5 than
prices/
39 4
area
area
This ,/
Less /
on effect Drought
outputs) (Total produced Resources
inputs) (Total used Resources
effect Quantity
3
outputs) (Total produced Resources
inputs) (Total used Resources
effect Price
.2700 -
change Total
produced or
:
used resources
Dollars
:
total of Percent
1955 to 1953 fron
production from received or in
us.d dollar each for Change
;
:
:
Change of Cause
:
Oregon Eastern
Strategy Redwtion Herd Budget, Ranch Representative
Drought During Changes Quantity and Price 21. Table
Lease Xnoreasjng $trater
of products produced dropped three percent.
ven though a very Low
price was paid for new leases in 1954 and 1955, the price was higher
than that required in 1953.
The price received for calves in 1955
dropped $1.50 per hundredweight, an unusually large amount.
A total of eight percent more resources was required to produce
22 percent more products.
The higher quality of hay land leased with
heavier yields of hay aided this net increase in production.
The effect of price changes outside the study area was negli
gible in the case of this strategy.
Drought caused a net price
reduction of six cents.
No Change $trate
Table 22. Price and Quantity Changes During Drought
Representative Ranch Budget, Lease Increasing trate
Eastern Oregon
:
:
Cause of Change
:
:
diienge for each dollar used
in or received from production
from 1953 to 1955
Percent of total :
: Döliárs
resources need
or produced
Total change
.0163
Price effect
- .0622
Resources used (Total inputs)
Resources produced (Total outputs)
3
- 3
Quantity effect
Resources used (Total inputs)
Resources produced (Total outputs)
Drought effect on prices2/
8
22
- .0572
/ This amount is the difference between the price change in the
survey area from 1953 to 1955 and the price change outside of
the survey area for the anne period.
Table 23
Price and Quantity Changes During Drought
Representative Ranch
dget, No Change Strategy
Eastern Oregon
Change for each dollar used
in or received from production
from 1953 to 1955
: Percent of total
: resources used
:
Dollars
: or produced
:
Cause of Change
V
Total change
-
Price effect
- .127].
Resources used (Total inputs)
Resources produced (Total outputs)
1
15
Quantity effect
Resources used (Total inputs)
Resources produced (Total outputs)
Drought effect on prioes/
- .0610
* 4
- 16
* .0544
/ This amount is the difference between the price change in the
suriey area from 1953 to 1955 and the price change outside of
the survey area for the same period.
produced decreased 15 percent.
Prices of yearling steers on these
ranches decreased $1.50 per hundredweight from 1953 to 1955, cows and
bulls $2.00, ani calves $1.00.
These price decreases accounted for
most of the change in prices of resources produced.
Apparently, by
not adjusting to drought, lower quality animals were marketed.
The quantity effect was also negative, with a decrease of six
cents per dollar of resources used.
Although quantities of resources
used decreased four percent, production dropped 16 percent.
The net drought effect on price was a loss of five cents for
ranchers choosing this strategy.
While prices outside the area
decreased eight percent from a moderate level in 1953, the local
price dropped 13 percent from a somewhat higher 1953 level,
The total change in vahae of production per unit of resources
used was compared in the last portion of Chapter V.
A comparison of the price changes within the study area indicated
that the no-change strategy was most adversely affected
See Table 24.
Ranchers choosing the herd reduction strategy were least affected.
If the drought in 1955 had been as severe on the econo
of the
region as the droughts of the nineteen-thirties, or the drought in
canaas in 1901 (34, p.19), markets would have been glutted temporarily
and thi8 solution
uld have had the greatest price disadvantage.
However, with the nation's eoonon
at a high level in 1955, several
previous years of widespread drought in other areas to drain off
Table 24,
Couparison of Price and Quantity Changes During Drought
Representatiiro Ranch Budgets, aetern Oregon
Hay : Con: Herd
: Lease
:buying :centrate:Reducing: in-
No
ichange
:
Total change
.3333
.3457
-.2700
.0163
-.1881
Price effect
-.0383
-.0017
.0180
-.0622
-.1271
Quantity effect
-.2950
-.3440
-.2880
.0785
-.0610
Drought effect on price
-.0738
.00U
-.0665
-.0572
-.0544
tncreasing group and 1eat advantageous Zor the concentrate buying
group.
However, the difference was not great between the three
groups, concentrate buying, hay buying, and herd reducing.
The
quantity change was a major factor in decreasing incne in the study
area in 1955.
It has been discussed at length in Chapter V.
High hay prices in the study area were not widely daplicated
CHAPTER VIII
Introduction
Procedures Used
was less on Plains ranches than Oregon ranches.
Only a slight in-
crease in resources (1.4 percit) were required on Plains ranches
from 1953 to 1955
In terms of this studr, ranchers of the northern
Great Plains could be classified as a hay-buying group.
Value of production per unit of resources used was related to
Northern : Eastern
: Great Plains: Oregon
Ranches
Ranchos
:
:
Item
:
Units
1953 net production of beef
1955 net production of beet
Change from 1953
Cwt.
Cit.
Percent
401.2
373.3
-6.5
490.7
433.0
-11.8
1953 total production
2.955 total production
Change from 1953
Dollars
Dollars
Percent
10,598
8,867
-16.3
10,433
8,507
-18.5
1953 total resources used
1955 total resources used
Change from 1953
Dollars
Dollars
Percent
12,764
12,943
1.4
10,565
11,475
8.6
Dollar
.8303
.9865
Dollar
Percent
.6851
-17.5
.7542
-23.6
Precipitation in 1953
Precipitation in 1955
Change from 1953
Inches
Inches
Percent
14.681/
12.141/
-17.3
12.54
8.94
-28.7
Change 0! outp.it/lnput from
1953 to 1955 per unit
decrease in precipitation
Percent
1.012
1953 production per unit
of resources used
1955 production per unit
of resources used
Change from 1953
1/ Miles City, Montana
.822
Severe Orought Jffects
10
Estimated Production
Table 26.
Drought,
Effects on Net
Eastern Oregon Cattle
:
Ranches
Plains : Plains :Estiniated
: Oregon
:
:ranches
: ranches : ranches :
in
Item
Plains
Ranch Income in Severs
1955
:
in
:
1955
ranches :
Oregon
: drought : 1955 to :
severe
:in severe: changes :ranohes in
uoi.ars : Doii.ars : DoLLars : DoLLars
Beef production
hundredweight
in
Total ranch
production
(433.0)
(375.3)
(230.4)
-38.6
(265.9)
8,507
8,867
5,263
-40.6
5,053
5,607
6,323
6,673
5,487
5,905
6,798
405
439
3,426
3,842
Total ranch
expenses/
Cash expenditures
Livestock
machinery,
and ],aborW'
5,423
5,467
134
-69.5
30
551
1,105
4,972
594
29,4
813
811
1,097
-
3,645
551
35.3
1,241
120
418
-125
-129.9
-44
2,900
2,544
-1,410
Feed,
Taxesf
Other coats
Depreciation
Net
ranch
income
/
-370
adjusted to 1955
the basis of
paid and received
/ Prices
in the
Great Plains in 1955 and 1936.
on
prices
northern
(cash expenditures and depreciation) items in 1955 adjusted
/ Expense
to 1936 on the basis of percentage change in northern Great Plains
ranches. Further adjustments were made in each category of input,
lowering the requirement by 23 percent.
Total resources used less capital charges and value of operator
and family labor.
4/ Feed, machinery, and labor grouped together to indicate feed cost,
both purchased and raised.
Taxes assumed constant from 1955 to conditions of severe drought.
/ The percentage change in the various categories of cash expenditures
when totaled prohibits a direct comparison of the percentage change
in total cash expenditures. It was considered more realistic to
adjust the estimated effects on Oregon ranches by categories rather
than by a total cash expenditure value.
/
1:31
Comparison of Drought Effects on Estern
Oregon Cattle Ranches
Net ranch income
Depreciation
Cash expenditures
Livestock
Feed, machinery
and labor
Taxes
Other costs
5,615
95
2,900
120
-139
-5,985
25
-2,715
-370
-3,270
-164
0
136
219
728
-18
509
-44
3,645
551
1,241
3,426
551
1,105
2,917
569
957
-20
-375
744
-250
764
125
284
30
-184
-3,454
(-167.1)
605
-5,380
(-224.8)
£ £U
: Normal to : Moderate
severe
:to severe
:
VWU&
789
-1,926
(-57.7)
: Normal to
moderate
:
-18
148
5,467
5,487
405
5,053
(265.9)
Severe
drought
4,723
280
8,507
(433.0)
:
t
5,423
:
Moderate
drought
5,607
4,818
Total ranch
expenses
(490.7)
10,433
:
:
j&WLij LWU %.l&4 JLUU
Nomsal
period
Total ranch
production
in hundredweight
Item
:
Table 27. Comparison of Estimated Production Effects in
Normal, Moderate Drought, and Severe Drought Periods
Eastern Oregon Cattle Ranchos
normal $0 severe drought periods is in the production category.
Value
of res$rces used increased slightly from a normal to a moderate
drought period, and decreased slightly from a moderate to a severe
drought period.
But the value of production dropped about 17 percent
and increased interest costs.
Ne
ranch income decreased by almost a constant amount of about
$3000 fom normal to moderate to severe drought periods.
The moderate
drought period approximates a level of living which Schickels would
as the critical limit of survival.
The severe drought period,
if it
in eastern Oregon.
Carr7over Effects of Drought in 1956
An analysis of variance, using the same groups as those analyzed
in Chapi
r IV (feed buying, herd reducing, and lease increasing) mdi-
cated n
significant difference in 1956 calf crop percentages resulting
from ad
tion of these strategies.
from 1955 to 1956.
However, calf crop percentages
The percentages fell sharply to a level
334
which was U percent under the previous year.
The ca]! marketing weights increased slightly from 3.955 to 1956
(1.86 pounds per head).
CaLf weights wore influenced by the grazing
conditions in the Spring and Summer of 1956,
marketing weights increased from 1955 to 1956.
Similarly, yearling
The increase for this
class of cattle was an average of 13.1 pounds per head for ranches
responding to the mailed questionnaire.
235
CHAPTER IX
SU*ARI AND CONCLUSIONS
The Hypothesis
The hypothesis of this study is:
Decisions that ranchers make
in response to short-run changes in forage production during a moderate
drought period are not equally effective in achieving desired results
because of production end price changes.
Drought Defined
Drought is defined in this study as a period in which net ranch
Drought Occurrences
Drought occurs somewhere in the western range area each year in
both the economic and physical sOnse.
Occasionally a major drought
covering large portions of the area will persist over a period of
years.
Such droughts occurred in 1860-64, 1880-86, 1894-95, 1929-36,
and 1944-56.
In eastern Oregon droughts occurred in 1868-73, 1900-08,
3.917-19, in three scattered years in the period 1930-39, and 1954-55.
J1i
Dught Literature
firm durizg drought periods have consisted of a) accumulation of
reserves prior to drought, b) flexibility of operation, c) diversi
fication, d) an insurance program, and e) price supports. AU of the
above are subject to limitations.
Study Procedure
The major drought practices in the study area in 1955 were:
a) purchased hay, b) purchased concentrate, c) reduced herd, d) increased leases, and e) no discernable change.
The representative budget technique was used to auaimariae the
various drought practices used
in
the study area.
Comparisons were made of the results of the various practices.
It was found that drought decreased livestock production in all
groups except in the lease increasg group.
Cash sales increased
from 1953 to 1955 except for the hay buying group.
increased except for the no-change group.
Cash expenses
And net ranch income
decreased from 1953 to 1955 except for the lease increasing group.
The change in net ranch income from 1953 to 1955 was least for
'I'
1Tects of Alternative Strategies
Ce VS Production Effects
iring Droug}it
Effects of Severe Drought
Conclusions
etudy area in 1955 is to increase the size of leases of both public
range lands and hay lands.
Increasing the amount of hay lands during
drought years can be accaraplished by adopting rw techniques to
increase yields on the present crop acres.
Notable among these is
fertilization of nati've meadows.
4.
The emergency drought program of 1955, although unsatis-
143
1.
Benedict, Murray R. Farm policies of the United States 17901950. New York, American Bock-Stratford Press, 1953.
5481).
2.
Benedict, Murray R. Can we solve the farm problem?
Lord Baltimore Frees, 1955. 601p.
3.
Brennan, C. A., et al. Fourteen years cattle production and
ranch earning power in northeastern Nevada: 1928 to 1941.
Rono University of Nevada, 1943. 31p. (Nevada Agricultural
experiment station. Station bulletin no. 165)
4.
Brennan, C. A., et al. The main reasons why range cattle ranchers
succeed or tail, Mono University of Nevada, 1933. 22p.
(Nevada Agricultural experiment station
Station bulletin
no, 133)
5.
Castle, sery N. Flexibility and diversification in western
Kansas. Journal of farm economics 36:273-284. May 1954.
6.
Clawson, Marion. Economic use and administration of a fluctuating forage supply. Berkeley, California, Bureau of
agricultural economics, 1943. 26p. (Mimeographed)
7.
Clawson, Marion. The western range livestock industry.
York, McGraw Hill, 1950. 401p.
8.
Craddock, G. W. and C, L. Foreling. The influence of climate
and grazing on spring-fall sheep range in southern Idaho.
Washington, U.S. Government printing office, 1938. 42p.
Department of agriculture. Technical bulletin no.
9.
Doing something about the weather.
March 1954.
Baltimore,
New
Farm management 3(3):36-39.
10.
Gray, James R. and Chester B. Baker. Organization, costs, and
returns on cattle ranches in the northern Great Plains,
1930-52. Bozeman, Montana state college, 1953. lO7p.
(Montana. Agricultural experiment station
Station bulletin no. 495)
11.
Gray, James R. Southwestern cattle ranches, orgai.aions, costs,
returns
State College, New Mexico college of agriculture
and mechanical arts, 1956. 87p. (New Mexico. Agricultural
experiment station. Station bulletin no. 403)
143
12.
Great plains agricultural council. Proceedings of research conference on risk and uncertainty in agriculture. Fargo,
North Dakota agricultural college, 1955. 98p. (North
Dakota. Agricultural experiment station. Station bulletin
no. 400)
13.
Halorow, Harold G. (od.) Contemporary readings in agricultural
economics. New Xork, Prentice-Hall, 1955. 4Up.
14
Hay, 1), 0.
15.
Heisig, Carl p. Income stability in high-risk farming areas.
Journal of farm economics 28:961-972. November 1946.
16.
Hildreth, R J
17.
Hochzmth, H. R. and Wylie B. Coodsell. Coemercia]. familyoperated cattle ranches, Intermountain region, 1930-47:
Organtzation, costs, and returns. Washington, U.S. Government printing office, 1948. 29p. (U.S. Department of
agriculture. Bulletin of farm management no. 71)
18.
Hopkin, John 1). Economics of western range resource use. Ph.D.
thesis. Ames, Iowa state college, 1954. 448 numbered
Relationship of farm population movement and drought.
Fargo, University of North Dakota, 1939. (South Dakota.
Agricultural experiment stat.on. Bimonthly bulletin 6)
and Gerald W. Thomas. Farming and ranching risk
as influenced by rainfall. Bryan, Texas agricultural and
mechanical college system, 1956. 36p. (Texas. Agricultural
experiment station. Release no. MF-l54).
leaves.
19
Hurtt, Leon C. Managing northern Great Plains cattle ranches to
minimize effects of drought. Washington, U.S Government
printing office, 1951. 24p. (U.S. Department of agriculture. Circular no. 65)
20.
Hutchings, Solar S. and George Stewart. Increasing forage yields
and sheep production on Intennountain winter ranges. Washington, U.S Government printing office, 1953. 63p. (U .5.
Department of agriculture. Circular no. 925)
21.
Hutchings, Selar S. Managing winter sheep range for great
profit. Washington, U.S. Government printing office, 1954.
46p. (u.s. Department of agriculture. Farmers bulletin
no. 2067)
22.
Jardine, James T. Range and cattle management during drought.
Washington, U.S. Government printing office, 1922. 83p.
(u.s. Department of agriculture. Bulletin no. 1031)
23.
Knight, Frank H.
Risk, uncertainty, and profit.
381p.
Boston,
Fiougkzton Mifflin Co., 1921.
24.
Lang, Robert. Density changes of native vegetation in relation
to precipitation. t.aramie, university of Wyoming, 1945.
31p. (Wyoming. Agricultural experiment station. 3u1letin no. 272)
25.
Letz, Roger B. Beating the drouth.
52, October 1953.
26.
Lodge, Robert W. Management for drought.
17(6):7, 27-28. 1954.
27.
Nelson Michael.
28.
Noll, William C. Environment and physical activities of winter
wheat and prairie during extreme drought. ncology 20'
479-506. 1939.
29.
Osborn, Ben, Effect of drought on range grasses.
goat raiser, 29:22-23. October 1948.
30.
Pool, Raymond J. Some effects of the drought upon vegetation.
Science 38:789-862, December 1913.
31.
Schiokele, Rairier. Fans business survival under extreme weather
risks. Journal of farm economics 31:931-941. November
1949.
32.
Schmidt, H. Drought and vitamin A deficiency in our ruminants,
Sheep and goat raiser 33:20-21,24. 1952.
33.
Skeets, E. W, and William Jackson. Handling livestock during
drought, Washington, U.S. Governmit printing office,
1930. l2p. (u.s. Department of agriculture. Circular
no. 140)
34.
Tannehill, Ivan Ray. Drought its causes and effects.
Princeton University press, 1947. 264p.
35.
US. Department of Agriculture. The western range. Senate document 199, 74th Congress, 2nd Session. Washington, U.S.
Government printing office, 1936. 620p.
36.
U.S. Department of Coemerce.
Cattleman 40(6):27-29, 50
Canadian cattlemen
Economics of increased hay production by use
of nitrogen fertilizer on mountain meadows in the Harney
basin, Oregon. Ph.D. thesis. Corvallis, Oregon state
college, 1957, 100 numbered leaves.
Sheep and
Princeton,
Weekly weather and crop bulletin,
special weather auranary 44(la):].-12. Washington, U.S.
Government printing office, Januarr 10, 1957. 12p.
NOTES ON PRODUCTION AND DISCOUNT RELATIONSHIPS
production would be exbended from the present to the future without
dtscounting.
The line AC represents points under normal' discounting
or discounting during a period when a drought is not in progress;
the line AL) represents points to which production from the pre3eflt
to the future would be carried during a continued drought situation.
The line CE represents the planning horizon with normal
Figure 3,
Prxiuction and Discount Jelbtion1ps
Undiscounted total production
_-
I
Out1puts
(k puts
in )resent
------Normal discounted production
- -- - Discounted production during draught
Outputs
in n
years
OutSuts
in second
year
in first
year
E
I
yar
L
-
Inpu
in n years
-
C
--
B
I
.-
N
Inputs in second year
Inputs In rirst year
o
Inputs in present year
A
I
diacounted production.
At point E, plans tar production would not
take place because production has no value.
ning horizon to decrease from QE to 01).
mine the length of the planning horizon.
Drougit causes the plan-
Several other factors deterThis discussion, however, is
limited to the discount effects.
The greater the rate of discounting, the shorter bocomee the
coefficients
BUDQETS AND COEFFICIENTS PIODUCTZON OF CALCULATION ON NOTES
150
the by multiplied (6)), and (5) columns either in value lowest (the produced calf of amount the
is (7) used Resources (3). column by divided is (1) column (6), values of set second the of case
the in (2); column by divided (1) column (5), values of set first the of case the in is, produced
equivalent calf of amount The (4). factor adjusting the by (1) coefficient first the izxultiplying
by calculated is coefficient second The follows: as is table this calculate to used technique The
493
$5,563
587
387.2
690.6
210.4
310.6
594.0
124.9
678
$2,625
114
623.4
540.4
1,230
$4,535
169
$3,465
89
$2,437
114
0
0
402
$5,375
0
367
$4,185
713
354
349.1
483.2
349,0
473.2
392.6
1,080
$5,903
158
0
$2,097
20
2304
$3,815
136
0
(8)
:
(7)
1.1250
1.0717
1.0956
397.6
668.1
592.2
1.2432
349.1
668.1
261.6
:
.9016
.9675
1.0000
1.3828
1.3545
349.1
668.1
312.1
1.1239
1.1248
1.3424
349.1
668.1
261.6
349.1
668.1
408.5
:
Cwt.
Cwt.:
:
:
:
(i)
(5)
Second: First: :
*
Unused
used
flesourcesResources
1955 in
/
-
(4)
:
:
:faotor
equiv,
:Adjusting:f
ZAmountof
2.7895
11.5849
.5417
3.4806
12.8326
.4774
3.0930
:Lo8o
$ll.9741 $8,000
114
.4357
3.0939
$U.9741
.4357
$U.9741
.4685 $13
.5849
3,0939
3.4772
.4357
$U.9741
$16.5577
.5902
3.0939
3.0939
3.0944
$16.9056
.4534
(3)
:
.4357
3.0939
$U.9741
.4357
(2)
Second : First
1955 in
Coefficients
1,230
$8,000
258
1,080
$8,000
114
1,080
$8,000
136
1,080
$8,000
178
(1)
:
.j
grazing public AUMs
capital Short-term
hay of Tons
grazing public AUMs
capital Short-term
Hay of Tons
Increasing Lease
grazing public AUMe
capital Short-term
hay of Tone
Decreas Herd
grazing public AUMs
capital Short-term
hay of Tons
*ying
Concentrate
grazing public AUMs
capita]. Short-term
hay of Tons
ying
Hay
:
:
Resources
:
:
Limits
/ Ranches Cattle Oregon Iaetern
Strategies Alternative and Original with Strategy Euying Hay of Production of Calculation
28. Table
Table 28 (continued)
: Value unused reiicos: Total hundredweight
Requirements
Resources
Coefficients
Price
: of calf equivalents
Value : Amount Price Value : from all resources
: Used : Unused: Total
:
Iie
-
(ii \
-
*
1)01.
Ray
Dol.
Dol.
Dol.
20 25.00
500
Cwt.
Cwt.:
Cwt
ying
Tone cZ hay
Short-term capital
AUMa public grazing
Total
Concentrate
Tons of hay
yi
Short-term capital
AUMs public grazing
Total
Herd Reducing
Tons of hay
Short-term capital
AUI4s public grazing
Total
Lease Increasin
Tome of hay
Short-term capital
AUMs public grazing
Total
No Chage
Tons o1 hay
Short-term capital
MIMe public grazing
Total
.4534
16.9056
3.0944
.5902
$16.5577
3.0939
25.00 11.3350
1.00 16.9056
6.75 20.8872
49.1218
2,097
0
1.00 2,097
0
6.75
2,597
349.0
52.9 401.9
25.00 14.7550
1.00 16.5577
6.75 20.8838
0 25.00
0
4,185 1.00 4,185
367 6.75 2,477
6,662
230.4
130.1 360.5
5,375
2,714
8,089
194.9
156.9 351.8
2,225
3,465
0
5,690
353.4
117.9
51.1965
.5849
$13.4685
3.4772
25.00
1.00
6.75
e4774
25.00
l2.8326
3,4806
100
.5417
11.5849
2.7895
6.75
14.6225
13.4685
23.4711
51.5621
11.9350
12.8326
23.4940
48.2616
0
5,375
402
89
3,465
0
25.00
1.00
6.75
25.00
1.00
6.75
0 25.00
25.00 33.5425
1.00 11.5849 15,563 1.00
6.75
18.8291
43 .9565
49.3
6.75
0
471.3
0
5,563
3,328
8,891
210.4 202.3 412.7
Table 2$, footnote / (continued)
corresponding set of coefficients (2) or (3)
The requirements of colwnn (10) are the coefficierits used (2) or (3) multiplied by the estimated price. The total hundredweight from unused
resources is the total value of coiwan (12) divided by the total requirement of colunu (10)
/ Factor used to adjust coefficient in 1955 based on changes taking place in use of resources
from 1953 to 1955.
154
CA is the sum of the total calf weight sold and consumed, less inveritory change, BR is the sum of the total bred heifer weight sold and
consumed, less inventory change, multiplied by the ratio of bred
heifer sale prices and calf sale prices, YR is the sum of the total
yearling heifer weight sold and consumed, less inventory change, multiplied by the ratio of yearling heifer sale prices and calf sale
prices, CO is the sum of the total cow weight sold and consumed, less
inventory change, multiplied by the ratio of cow sale prices and calf
sale prices, ST is the sum of the total steer weight sold and consumed,
less inventory change, multiplied by the ratio of yearling sale prices
and calf sale prices, and BU is the sum. of the total bull weight sold,
less inventory change, multiplied by the ratio of baloney bull sale
prices and calf sale prices.
Hay
1,459
Net Ranch Income
861
421
-159
42 -2,657
4,91].
573
1,112
421
9,952
573
573
1,193
421
8,274
573
813.
266
675
7,295
131
151
6,068
879
748
131
675
4,953
(23o.4)(360.5)
18.00 18.00
4347 6,489
143
1,883
879
151
153
4,857
1,067
421
5,855
149
2,757
811
77
7,234
131
750
8,115
Expenses
Livestock
Feed
Machinery
Labor
Taxes
Other
Depreciation
Total
1,250
7,314
5,933
131
17.00 18.00
: Concentrate
:
1,112
421
9,407
573
5,810
828
512
151
6,332
131
575
7,038
824 -2,369
141
435
828
7
573
790
421
3,195
575
4,019
3,313
131
17.00 18.00
(194.9) (351.8)
Herd
:
4,886
149
1,373
1,098
300
573
839
421
4,753
1,183
1,112
421
8,706
573
157
4,838
1,098
507
(353.4)(471.3)
17.00 18.00
6,008 8,483
131
133.
3,500 1,275
9,639 9,889
Lease
:
No
1,112
421
9,733
573
153
6,024
829
621
7,560
0
13].
18.00
7,429
401 -2,173
141
461
829
104
573
778
421
3,307
17.00
3,577
131
0
3,708
(210.4) (412.7)
Net Income Estimates of Hay Strategy with Other Alternatives
Eastern Oregon Cattle Ranches
(349.0) (401.9)
Table 29.
I-J
17
The basic units used in this calculation are as follows:
N
(1)
N
Z
i1
i].
N
(2)
N
(Q5P5) -
E
i1
(Q3jP5j)
i1
N
N
(Q5jP5j) -
(3)
i1
(4)
(QjP5j)
(Q3jP3j)
1(Q5jP5j)
(Q5jP3j)
i1
where Q3j is the quantity
produced and used in 1953,
is the price paid
and received In 1953,
Q5j is the quantity
produced and used in 1955,
is the price paid
and received in 1955, and
P0j is the price paid
and received in 1955 outside of the drought area.
(Qsii)
Unit (1) is used to calailate the change in total quantities and
combined effects on production per unit of resource used.
To segregate out quantity changes which have taken place in the
study area from 1953 to 1955, unit (2) is used.
In effect, this cal-
culation values resources used arid produced in 1953 arid 1955 at 1955
prices.
The difference is attributed solely to quantity Changes.
Each quantity is weighted br the price paid in 1955.
To segregate out the effects of price changes which have taken
place in the study area, unit (3) is used.
In effect, this calcula-
tion values resources used and produced in 1955 at both 1953 and 1955
prices.
The difference is attributed solely to price change.
Each
price is wsihted by the quantities used in 1955.
To segregate out the effects of drought on prices (that is, to
avoid price level changes from 1953 to 1955), unit (4) is used.
To determine the changes either in price or quantity of inputs,
outputs, and outputs per unit of input, each of these categories are
treated separately by using the appropriate unit.
APPENDIX IV
Table 30. Financial Statement
Averages of Seven Ranches in the Hay Buying Strategy
Eastern Oregon
Item
Units :
1953
1955
Dollars
Dollars
Dollars
Dollars
Dollars
97,627
57,203
32,422
6,654
1,348
94,705
60,964
26,218
6,215
1,308
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
17,031+
13,481
8,010
711
6,94].
1,995
6,318
694
5,846
209
5,637
Total resmarces used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other
Net depreciation
Capital charge
Family and operator labor
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
14,132
7,002
34
919
1,816
1,515
528
2,190
-63
3,336
3,857
16,806
8,619
608
2,885
1,210
1,338
649
1,929
1,079
3,153
3,955
Net ranch income
Dollars
10,095
3,783
Ranch investment
Real estate, Jan. 1
Livestock, Jan. 3.
Machinery, Jan. 1
Feed from prior year
Total production
Cash sales
Perquisites /
Inventory change
Feed
Livestock
8,31.3
Al Products grown and consumed on ranch, including rental
fann house.
a1uo of
I
Item
: Unite :
1953
: 1955
I
Total ranch unit
Production per unit of
resources used
Dollars
1,2053
.8022
Livestock production
Calf crop percentages
Calf sale weights
Yearling sale weights
Percent
Lbs
Lbs.
83.6
76,0
408
397
Cwt.
917.7
799.7
A.U.M.
1,23?
1,346
438
404
Acres
Tons
302
1.69
260
1.09
Acres
3.07
4.71
A.U.M.
1,654
1,623
Tons
Months
.165
5.0
.193
Net beef equivalents /
Forage and feed produced
A,U.M.s range pensit
Ray equivalents
available /
Acre8 of cropland
harvested
Yield per acre
Grazing rate on private
range per A.U44.
Feed rates
A.U.M.s of feeding
Hay equivalents fed
per A.U.M.
Tints on teed
Tons
21
4.7
/ None sold.
J Includes weights of beet sold, used, and change in inventory.
/ Other feed, including grains and protein concentrates, reduced to
hay weights on basis of T.D.N. values.
Table 32. Financial Statement
Averages of Seven Ranches in the Concentrate Buying Strategy
Iastern Oregon
Item
: Units :
1953
1955
Ranch investment
Real estate, Jan. 1
Livestock, Jan. 1
Machinery, Jan. 1
Feed fran prior year
Dollars
Dollars
Dollars
Dollars
Dollars
109,219
67,601
30,608
8,011
2,999
116,635
77,514
27,026
7,979
4,116
Total production
Cash sales
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
17,862
10,228
12,263
12,425
629
791
1,367
576
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other
Net depreciation
Capital charge
Fm'dly and operator labor
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
14,386
7,045
656
1,071
2,651
977
4,096
3,348
2,006
2,173
1,408
696
2,404
-711
3,981
3,662
Net ranch income
Dollars
10,920
3,780
Perquisites /
Inventory change
Feed
Livestock
563
7,071
4,194
2,877
561
1,129
.-103
16,126
9,194
507
/ Products grown and consumed on ranch, including rental value of
fan house.
Table 33. Measures of Productivity and Costa
Averages of Seven Ranches in the Concentrate Buying Strategy
Eastern Oregon
I
Iten
Total ranch unit
Production per unit of
resources used
Livestock production
Calf crop percentages
Calf sale weights
Yearling sale weights
Net beef equivalents /
A,U.M,a range peruit
Hay equivalents
available /
: Units:
1953
Dollars
1.2416
.7604
Percent
Lbs.
91.0
432
88.3
: 1955
388
592
Cwt.
525
795.7
858.7
A.U,M.
1,475
1,493
740
464
Acres
Tons
423
1.35
426
Acres
11.69
10.78
A.U.M.
782
897
Tons
Months
.299
.388
3.2
3.7
5.
Tons
Acres of croplarid
harvested
Yield per acre
Grazing rate on private
range per A.(J.M.
Feed rates
A.U.M.s of feeding
Hay equivalents fed
per A .0 .M.
Time on feed
.93.
J Includes weights of beef sold, used, and change in inventory.
/ Other feeds including grains and protein concentrates, reduced to
hay weights an basis of T,DJ. values.
163
Table 34. Financial Statement
Averages of Five Ranches in the Herd Reducing Strategy
Eastern Oregon
Item
Units
:
1953
:
1955
4
4
Ranch investment
Real estate, Jan. 1
Dollars
Dollars
Dollars
Dollars
Dollars
132,856
82,621
44,035
5,020
1,180
127,232
85,486
35,051
5,450
1,245
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
22,251
17,475
516
4,260
126
4,134
11,075
16,012
602
-5,539
-497
-5,042
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other
Net depreciation
Capital charge
Family and operator labor
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
18,290
10,784
1,836
665
3,525
2,302
743
1,713
-723
4,149
4,080
17,342
10,927
1,040
1,870
2,518
2,348
818
2,333
-410
3,817
3,038
Net ranch inconie
Dollars
12,190
588
Livestock, Jan. 1.
Machinery, Jan, 1
Feed frca prior year
Total production
Cash sales
Perquisites /
Inventory change
Feed
Livestock
/ Products grown and consumed on ranch, including rental value of
farm house.
values. T.D.N. of basis on weights hay
to reduced concentrates, protein and grains including feed, Other
inventory. in change and used, sold, beef of weights Includes /
1.2166
.6386
94.5
1,150,4
725
898.8
692
429
92.0
1,411
1,458
298
224
Tons
Acres
1.09
290
212
Acres
4.26
4.73
989
842
.205
.228
2,5
2.7
.92
1955
;
474
1953
:
Months
Ton
A.U.M.
Tons
A.U.M.
Cwt.
Lbs.
Lbs
Percent
Dollars
Units
:
feed on time
A.U.M. per
ted equivalents Hay
A,U,M.s
rates Feed
A.U.M. per range
private on rate Grazing
acre per Yield
harvested
cropland of Acres
/ available
equivalents Hay
permit range A.U.M,s
/ equivalents beef Net
weights sale Yearling
weights sale Calf
percentages crop Calf
cTTt11
used resources
of unit per Production
unit ranch Total
Item
Oregon Eastern
Strategy Reducing Herd the in Ranches Five of Averages
Coats and Productivity of Measures 35. Table
165
Table 36. Financial Statesient
Averages or Five Ranches in the Lease Increasing Strategy
Eastern Oregon
Item
: Units :
1953
:
1955
Ranch investment
Real estate, Jan. 1
Livestock, Jan. 1
Machinery, Jan. 1
Feed fron prior year
Dollars
Dollars
D011ars
Dollars
Dollars
46,451
23,291
3,514
1,585
Total production
Cash sales
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
13,752
7,291
377
6,084
916
5,168
14,649
10,579
Total resources used
Cash expenses
Livestock
Feed
Machinery
Labor
Taxes
Other
Net depreciation
Capital charge
Family and operator labor
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
10,108
4,759
363
894
1,996
686
360
660
-492
2,711
3,130
12,751
7,242
695
1,911
1,866
1,312
519
939
-368
2,676
3,201
Net ranch inconie
Dollars
9,485
7,775
Perquisites /
Inventory change
Feed
Livestock
74,843.
91,868
62,737
22,680
4,324
2,127
586
3,484
307
3,177
3/ Products grown and consumed on ranch, including rental value of
farn house,
vahies, T.D.N. of basis on weights hay
to reduced concentrates, protein and grains including feed, Other /
inventory. in change and used, sold, beef of weights Includes
Dollars
1,3605
1,1489
Percent
688
452
96.4
613.3
800.6
687
390
95.9
1,177
1,572
Tons
315
390
Tons
Acres
1.34
161
1.48
230
Acres
9.30
8.34
A.U.M.
633
911
Months
Ton
.276
.294
3.6
3.8
1955
:
1953
:
A.U.M.
Cwt.
Lbs.
Lbs.
Units
/
feed on Time
A.U.M. per
fed equivalents Hay
feeding of A.U.M.s
rates Feed
ASU.M. per range
private on rate Grazing
acre per Yield
harvested
cropland of Acres
&/ available
equivalents Hay
pez,nit range A,U.M,s
produced feed and Forage
1/ equivalents beef Net
weights sale Yearling
weights sale Calf
percentages crop Calf
production Livestock
used resources
of unit per Production
unit ranch Total
Item
Oregon Eastern
Strategy Increasing Lease the in Ranches Five of Averages
Costs and Productivity of Measures 37. Table
house. farm
of value rental including ranch, on consumed and grown Products
2,061
5,708
26,715
2,596
5,931
21,514
49,537
79,578
1,217
2,605
3,822
67
10,572
15,072
703
1,299
2,002
647
10,607
13,256
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
1,041
2,489
1,234
838
7,037
12,973
Dollar's
503
Dollars
Dollars
3,114
3,103
-281
932
3,371
3,001
-1,183
1,073
555
970
3,218
1,559
741
8,116
13,305
1955
:
p433 149
83,917
1953
:
Dollars
Dollar's
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Dollars
Units
/
labor operator and Family
charge Capital
depreciation Net
Other
Taxes
Labor
Machinery
Feed
Livestock
expenses Cash
used resources Total
Livestock
Feed
change Inventory
Perquisites
sales Cash
/
prodaxction Total
year prior from Feed
1 Jan. Machinery,
1 jan. Livestock,
1 Jan. estate, aeal
investment Ranch
Item
:
Oregon Eastern
Strategy Change Mo the in Rancheø Nine of Averages
Statement Financial 38. Table
Table 39. Measures of Productivit7 and Costs
Averages of Nine Ranches in the No Change Strategy
Easteni Oregon
Item
Total ranch unit
Production per unit of
resources used
Calf crop percentages
Calf sale weights
Yearling sale weights
Net beef equivalents /
Forage and feed produced
A.U.M.a range pexnit
Hay equivalents
available /
: 1955
: Unite :
1953
flollars
1.1618
Percent
Lbs
Lbs.
Cwt.
94.].
725
631.5
A.U.M.
1,375
1,285
530
458
Acres
Tons
308
1.79
lb ",
Acres
6.33
5.64
Tons
.9963
447
Acres of croplazxt
harvested
Yield per acre
Grazing rate on private
range per A.U.M.
Feed rates
A.U.M.s of feeding
Hay equivalents fed
per A.U.M.
Time on feed
A.U.M.
1,087
Ton
Months
.248
309
5.0
/ Includes weights of beef sold, used, and change in inventory.
/ Other feed, including grains and protein concentrates, reduced to
hay weights on basis of T.D.N. values.