Page 47 - Azerbaijan State University of Economics

RISK REDUCTION THROUGH OPTIMAL GRAZING SCENARIOS FOR
LIVESTOCK/FORAGE SYSTEMS IN TEXAS PANHANDLE

Precipitation records for Amarillo were obtained from the National

Weather Service (NWS, 2009). Records are analyzed for 1992-2009 to
correspond with the same time period as the cattle prices. Distributions for

precipitation along with variation in annual precipitation are determined.

Forage yields under dryland conditions are highly correlated with
precipitation. Three precipitation categories (Low, Normal, High) are

developed for comparison of production scenarios based on precipitation
patterns. Low precipitation years are those with precipitation that falls in the

lower 25% of the distribution. The High precipitation category includes
years in the upper 15% of the distribution, and Normal years fall in the 60%

of the distribution around the mean annual precipitation. Precipitation risk

and relative risk are determined by the standard deviation and the coefficient
of variation for precipitation during the years of interest.

Expected forage production under High, Normal, and Low

precipitation is estimated for each scenario based on precipitation variance.
Expected cattle weight gain for High and Low years are determined by

transforming forage yield into weight gain via NRC nutrient requirements
and forage nutrient values. Total Returns (TR) and NR are then calculated

for High and Low years for each scenario.

Results and Discussion

The four scenarios presented assume purchase of steers weighing 575

pounds. Sale weights for steers range from 735 lbs to 775 lbs. Mean prices
for steer purchase and sale are presented in Table 2. Steers purchased in

November (WH) had a mean price of $84.82 per cwt., compared to mean
prices of $90.00 and $91.73 per cwt for 575 lb steers purchased in May and

July, respectively. Steers sold on March 1 (WH) received a mean price of

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