An economic analysis of beef production and emerging technology on commercial cattle ranches in the southwest Texas High Plains area

Abstract

For many years, ranchers have been faced with relatively low returns to resources allocated to beef production. Structural changes in the beef production industry, adoption of new technology, an inelastic demand for beef, and inflexible ranch organization intensify the problem of low returns to resources in ranching. The objectives of the study included an economic analysis of current and feasible production practices and emerging technology in an important ranching area of Texas. The theory of the firm provided the framework of the analysis. Entrepreneurs were assumed to be profit maximizers and linear programming techniques were used to analyze ranch resource use problems. Survey data on input-output coefficients were used, first, to develop a typical ranch and, second, to develop enterprise budgets for various alternative livestock enterprises in the study area. The typical cow-calf beef-producing ranch was not a profitable operation in the resource area if interest charges on land were considered a production cost. The returns above variable costs were positive, but all overhead costs were not quite met. However, when the average appreciation value was allocated to land, returns were substantial. ...