Economics of crop vs. pasture

Row Crop Profitability
Soils with lower yields (marginal soils) often do not yield enough to be profitable and are often highly erosive. A study conducted by Iowa State University evaluated row crop profitability and determined that the drop in commodity prices and steady input costs resulted in vast stretches of farmland that had a negative annual net return in 2015.  An interactive map of Iowa profitability for the study years can be found at http://mesonet.agron.iastate.edu/GIS/apps/profit.

Alternate land uses, such as converting the ground to pasture, may be more profitable in the long-term. Diversifying farming systems can reduce risk and provide environmental as well as economic benefits.  Allamakee NRCS/SWCD staff have worked with ISU Extension specialists to develop a basic economic comparison of land use and profitability.  The comparison looks at net return for corn production, grazing stockers on improved pasture, cow-calf on improved pasture, cow-calf on bluegrass pasture, and producing hay versus buying it.

If you would like to look at the potential profitability for corn or soybean production on your farm, go to ISU’s AgDecision maker website.

Example soil type comparison

Figures were compared using an 837D2 soil type (Village silt loam, 9-14% slope), which is often cropped or pastured. The CRP rental rate was used for the cash rent equivalent land cost for each land use.   Using NRCS soil survey information, ISU nutrient recommendations, and ISU cost-estimates, the evaluation found that corn production had a potential negative return of approximately $90/acre using $3.91 as the projected corn price.  Cow-calf on bluegrass pasture and hay production of 4 tons per acre (3 cuttings) also had negative returns.  The most profitable of the land uses analyzed was cow-calf on improved pasture with the assumption that the cattle are rotated at least once every 14 days to allow for adequate forage.  Stocker cattle had a small positive return and hay production of 6 tons per acre (4 cuttings) was close to break-even.  We did not factor in any crop insurance payments or Federal ARC/PLC program payments.  Obviously the potential profitability changes based on the soil type evaluated and the prices used, among other factors, but they do reinforce the idea that some soils might be more profitable with a land use other than corn production.

ISU Crop and Livestock Land Use Analyzer ISU Extension also has a tool called the “Crop and Livestock Land Use Analyzer” on their Ag Decision Maker website to help you evaluate the potential long-term profitability and soil loss associated with different land uses based on soil types.  You can fill in information from your own farm to get projected profits for different land uses.

Grassfed Beef Decision Maker – The Pasture Project The Pasture Project works in the Upper Mississippi River Basin to increase the number of acres of farmland that are sustainably managed. They developed a spreadsheet that allows you to examine the costs of various beef cattle enterprises and make informed financial decisions.

Chippewa 10% Cropping System Calculator – Land Stewardship Project An excel-based tool that is similar to the ISU Crop and Livestock Land Use Analyzer.  It allows you to compare two crop rotations, each up to six years in length, and provides average yearly returns as well as a year-by-year breakdown. The Calculator takes into account the crop-specific costs for many popular crops, but also the overhead costs of the entire farm operation. The default values are gathered from the FINBIN Database for a 10 county region in the Chippewa River Watershed in west-central Minnesota.

Financial assistance for pasture management including cropland conversion

If you may be interested in converting some areas of cropland to pasture, financial assistance may be available from NRCS through the EQIP program. We will work with you to develop an NRCS grazing plan to discuss what practices would be needed for your site such as internal fencing, watering systems, seeding, and rotational grazing. Please call or stop by the Allamakee County SWCD/NRCS office to meet with staff and discuss potential options.  You may also call or stop by to discuss this economic analysis of cropping versus pasturing marginal cropland.

Practices available to receive financial assistance

  • Fence
  • Seeding
  • Prescribed grazing
  • Waterline
  • Watering tanks
  • Watering pumps
  • Heavy use protection
  • Access ramp
  • Access control (excluding cattle from streams, ponds, or woodlands)