An economic model for planning combination small stock-cattle herd development : an application to Edwards Plateau, Texas

Abstract

Ruminant production systems analyses, in the past, has focused on cattle. An increasing demand for red-meat production, low cattle prices in the early 1970's and increasing prices for the small stock classes and their by-products has caused attention to be turned to sheep and goats. The study was undertaken to develop a model which incorporated both biological and economic information to answer the following questions: (1) What is the optimal organization of a combination small stock-cattle ranch? (2) Do opportunities exist for the growth of a ranch of this type? Ideally the study area should be a developing country where the majority of this type of herd exists. However, data availability precluded this, therefore, the Edwards Plateau region of Texas, which has similar herds, topographic and climatic attributes, was selected as the study area. A linear programming-simulation model was developed to evaluate the production patterns and growth potential by simulating recursively for multiples years, as follows: (1) the development of an ex ante ranch plan based on expected prices and yields, (2) the generation of stochastic prices and yields, (3) simulation of the implemented (now ex post) plan, and (4) an update of the plan, formulating a new ex ante plan incorporating the adjustments in expectations with respect to prices and yields. The model cycles over step 1 through 4 for simulation of each time period. Simulation experiments for the Edwards Plateau region were the application of 5 alternative equity levels and 4 tenure situation. Each application included 100 simulations of a 10 year planning period to develop a probability distribution for the results. The production pattern indicated that forage production would be the primary use of the land. Small acreages were used in the production of hay and oats in the first year. In subsequent years, hay and oats were purchased. The livestock pattern remained fairly stable for the initial ears of the planning period. After the fifth year, cattle were substituted for goats at varying rates of substitution dependent upon the expected price relationship. After the first year the number of sheep did not change. Overall, livestock numbers were 21% less on an animal unit basis for a ranch of this size than normally found in the Edwards Plateau region...