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Investment Analysis Of Replacing Endophyte-Infected With Endophyte-Free Tall Fescue Pastures

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  • Marchant, Mary A.
  • Murrell, Courtney Paige
  • Zhuang, Jun

Abstract

Cattle consuming tall fescue pastures infected with the endophyte Neotyphodium coenophialum often suffer physiological disorders that reduce animal performance. One solution is to replace endophyte-infected tall fescue pastures with an endophyte-free mixture. A benefit-cost analysis was conducted to determine the profitability of pasture restoration. The profitability of this action depends on the percentage of endophyte in existing pastures, the discount rate, and the stand life of the endophyte-free tall fescue variety. Our benefit-cost analysis results indicate that in order for pasture replacement to be profitable, the existing pastures must be infected with more than 16.1% of the endophyte, assuming the stand life of endophyte-free tall fescue is 12 years and the discount rate is three per cent. Additionally, a sensitivity analysis was conducted to determine the impact on the critical infestation level when the following parameters are changed: the discount rate, the baseline calving rates, and the pasture stand life. This research provides farmers with a practical investment analysis model for replacing endophyte-infected with endophyte-free tall fescue pastures.

Suggested Citation

  • Marchant, Mary A. & Murrell, Courtney Paige & Zhuang, Jun, 2004. "Investment Analysis Of Replacing Endophyte-Infected With Endophyte-Free Tall Fescue Pastures," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34630, Southern Agricultural Economics Association.
    • Handle: RePEc:ags:saeaft:34630
    DOI: 10.22004/ag.econ.34630
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    References listed on IDEAS

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    1. Standaert, James E., 1987. "Costs And Benefits Of Fescue Pasture Renewal," Department of Economics and Business - Archive 259715, North Carolina State University, Department of Economics.
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    Cited by:

    1. Oliver Musshoff & Norbert Hirschauer, 2008. "Investment planning under uncertainty and flexibility: the case of a purchasable sales contract ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(1), pages 17-36, March.
    2. Smith, Stephen A. & Caldwell, James D. & Popp, Michael P. & Coffey, Kenneth P. & Jennings, John A. & Savin, Mary C. & Rosenkrans, Charles F., Jr., 2012. "Tall Fescue Toxicosis Mitigation Strategies: Comparisons of Cow-calf Returns," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 44(4), pages 1-16, November.
    3. Oliver Musshoff & Norbert Hirschauer, 2008. "Adoption of organic farming in Germany and Austria: an integrative dynamic investment perspective," Agricultural Economics, International Association of Agricultural Economists, vol. 39(1), pages 135-145, July.
    4. Tubetov, Dulat & Musshoff, Oliver & Kellner, Ulla, 2012. "Investments in Kazakhstani Dairy Farming: A Comparison of Classical Investment Theory and the Real Options Approach," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(3), pages 1-28, August.

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      Land Economics/Use;

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