Economics of Tall Fescue Pasture Renovation

One of the most common questions I get regarding Novel Endophyte Tall Fescue is how much it will cost to establish it and whether or not it will pay off.  This is a complex question because there are very many factors that will impact the financial outcome.  To address the question, an agricultural economist at Missouri Extension (Joe Horner) worked with members of the Alliance for Grassland Renewal to evaluate the costs and benefits of fescue pasture renovation.

Joe developed a spreadsheet-based model which includes all the major costs and benefits of pasture renovation, and these can easily be changed to give you the ability to ask “what if” questions regarding major production aspects.  Joe brought this tool to a subset of Alliance members (including John Andrae from Clemson, Jeff Lehmkuhler from Kentucky, Gabe Pent from Virginia Tech, and Dennis Hancock from Georgia) for additional development.  We worked as a team to modify some of the model components, and to come to agreement on the most representative costs and expected benefits.

The first thing to emphasize is that it is expensive to renovate pastures.  Many of the costs don’t depend on what you are going to plant.  If the fertility is low you might need to apply lime, phosphorus or potassium, but you would need to correct that no matter what you plant.  Other costs like spraying, planting a smother crop, planting the new forage, are all costs you can expect regardless of what you plant.  A major cost is “opportunity cost” which is the lost forage production you will experience in the first two years.  If you are starting a farm from scratch and don’t have animals yet, the opportunity cost might be zero.  But, if you are fully stocked you will either need to reduce animal numbers temporarily or purchase hay to allow the renovated acres to become well established.

The only cost I have not mentioned is seed cost, which is a sometimes a barrier for many farmers.  To quote my old friends Don Ball and Gary Lacefield, “there is nothing more expensive than cheap seed”.  It is true that Novel Endophyte Tall Fescue seed is more expensive than Kentucky31, but not as much as you might think.  Novel Endophyte Tall Fescue seed costs about $4/lb this year, while KY31 is about $2/lb.  The recommended seeding rate will be about 20 lbs/acre (depending on state), so that means $80 in seed for Novel and $40 for Toxic.  It would not take long to recover $40/acre!  !Typically the seed quality is higher in Novel Endophyte Tall Fescue because it is all new crop and has undergone extensive testing for quality control. 

There are several systems that have proven to work for renovation including tillage, spray-smother-spray (no-till) and spray-wait-spray (no-till).  You can learn more about these and other establishment system somewhere else….can we link to something that shows those systems. For this article I will stick to the spray-smother-spray system which involves using a summer annual smother crop to prepare the field for planting Novel Endophyte Tall Fescue.  This system gives the advantage of providing a summer annual crop to graze which helps to buffer the opportunity cost for the system.

There are many potential benefits of the renovation, including potential improvements in yield (increased cow grazing days), increased calf weaning weights, increased breeding rates, decreased calf death loss, and reduced costs associated with overcoming toxicosis (like feed, use of antibiotics, etc.). 

Most farmers want to know how long it will take to pay off their investment in the overall renovation (no matter what is planted) and that is understandable.  Our averages show the cost of renovation is going to be about $260/acre, and again that seems expensive!  It is, but I would say it would be worth it in almost all cases if you are converting from toxic fescue, as eventually the improved animal performance and potentially improved yield will payback and then start making you money.

There are a number of ways you can express the economic returns, but after talking to a lot of farmers about this the thing that is easiest to think about is how long it will take to payback the investment.  With all our average values for both the costs and benefits, it takes about 5 years to breakeven.  It takes a little longer on the East Coast than in Missouri (because most costs will be higher), but either place it is close to that five years.

Joe’s spreadsheet tool can help us think through what factors might reduce the time to breakeven, and important variables include stocking rate, how much performance is reduced due to toxicosis, and whether the pasture is up to it’s full production potential.  These factors really need to be evaluated on a case by case basis.  At low stocking rates there are a lot more acres/cow that need to be renovated, so that makes for a longer payback time.  If you are not experiencing much animal performance loss (for example due to adopting fall calving) then it will also take longer to pay back.  If pasture needs renovation such that yield will be higher once the new grass is established, then it will not take as long to payback.

One thing that research has shown is that you can get benefits from renovating 25% of your acreage and using it strategically for times when animals are very sensitive to the toxins (like during the breeding season). We have worked with many farmers that tell us that once they had enough non-toxic forage for their growing calves, replacement heifers, during breeding, etc. it made all the difference even though much of the farm remained in toxic KY31.

For example, if you renovate 25% of your pastures and those give you increased yield (+100 cow days) after establishment, then that really works out well and your investment would be paid back in as little as 2 years!!  How many bankers would pass up that kind of deal?!

Often we assume that the financial aspects are the number one factor driving farmers.  However, many of you are not raising cattle and managing pastures primarily for the money.  I for example have a very good job so that I am not that worried about scraping every penny I can out of a cow.  For me the things that motivate me the most are taking the best care of the animals I can, having them healthy with the fewest problems possible, producing the best beef possible (have you ever gone to a restaurant to eat your own beef?  It will make you think!), and doing things that are challenging and rewarding.  If you are not in it mostly for the money, don’t let that stop you from doing what you can to improve your farm. Taking on this kind of project can be very fun and rewarding, so if that is what you are in this for, go for it!

In closing, pasture renovation is expensive and is not something to take lightly.  Given all the costs associated I can’t imagine a situation where I would recommend using KY31.  By spending $40 more per acre on seed, you will see great improvement in animal performance, and you will not have to spend so much on supplements, medications and other strategies to overcome the effects of toxic fescue.  There are many things you can do to mitigate the effects of toxic fescue, but none will pay off more in the long run than renovating pastures to non-toxic forages like Novel Endophtye Tall Fescue.   The critical thing is to get started….you will find that the biggest returns are realized on those first acres that you convert. Once you see some of your animals after they have been on non-toxic forages for an extended time, you will never look back!

The Alliance for Grassland Renewal is a national organization focused on enhancing the appropriate adoption of novel endophyte tall fescue technology through education, incentives, self-regulation and promotion.  For more resources or to learn more about the Alliance for Grassland Renewal, go to http://www.grasslandrenewal.org