COMPARATIVE ECONOMIC AND ENVIRONMENTAL TRADE-OFF ANALYSIS FOR MANITOBA COW-CALF PRODUCTION
There were 12.5 million head of cattle in all of Canada as of January 1st, 2012, of which 7.4 million were on cow-calf farms. Of this population, 1.2 million head of cattle were in Manitoba, and within that, 880 thousand were on cow-calf farms. Canadian and Manitoba beef producers have experienced significant volatility in the cattle market. This is partly as a result of loss of exports of cattle to the United States, first due to occurrence of the Bovine spongiform encephalopathy (BSE) Crisis, and then through the Country of Origin Labelling (COOL) legislation developed in the United States. While the beef industry has endured market fluctuations, the North American cattle herd has also been responsible for greenhouse gas (GHG) emissions, through enteric fermentation within their digestive tracks, storage of manure on farms, through the spread of manure on crop fields, and through the production of feed for cattle. Of the total Canadian GHG emissions, agriculture contributed 8 percent in 2013. For the same year, within the total agricultural GHG emissions, cattle and sheep production resulted in 40 percent of methane emissions, and 90 percent of nitrous oxide emissions, both expressed in carbon dioxide equivalent. Regionally, the share of agricultural GHG emissions in Manitoba make up a larger proportion of total provincial GHG emissions, at 31 percent of 21.4 Mt CO2e, as the province has fewer emissions from transportation or stationary combustion.. The confluence of low profitability and larger amounts of GHG emission (relative to other provinces) has led to some discussion on adopting measures to reduce these emissions. This has caused some stress in the beef industry, as some of these proposed solutions could lead to further loss in profits. An European study of the beef sector has investigated the impact of some policy instruments, such as emission taxes, and has suggested that while such measures are effective, they would also be financially restrictive to beef producers, or result in high administrative costs for governments (Neufeldt and Schäfer 2008). However, these measures might be unnecessary, as the Manitoba Beef Producers (2011) have indicated that the Manitoba beef producers are willing to undertake alternate management practices to benefit environmental causes if they do not negatively affect their profitability or livelihoods. Therefore, providing methods that lead to lower GHG emissions while providing high levels of profitability, or maintaining current levels of profitability would be considered a welcome set of information for the Manitoba beef cattle producers (and likely producers in other provinces). In order to understand GHG emissions on beef farms, a Canada-wide survey was undertaken in 2012. Financial support for this survey was provided by a variety of interested parties including the University of Manitoba, Alberta Agriculture and Rural Development, the BC Ministry of Agriculture, Manitoba Agriculture Food and Rural Initiatives, and Agriculture and Agri-Food Canada, with the support of the Beef Cattle Research Council. Researcher Aklilu Alemu from the University of Manitoba used principle component analysis and cluster analysis to create eight clusters of representative farms across the country. Of the eight Canadian clusters, only four clusters had a population greater than one in Manitoba. The centroid from each cluster was chosen as a representative farm for this study. Estimates of GHG emissions from each farm were then determined using Holos, a GHG emission model developed by the Government of Canada. To compare GHG emissions against profitability on a farm, this study evaluated revenues and costs of four Manitoba farms (One each from the four clusters). The revenues included the sale of weaned calves and cull cows, as well as the sale of unused feed and non-feed grain. The costs for the whole farm included the cost to grow feed for the cattle, while operating costs for each of these farms included veterinary, transportation, manure removal, and utility costs. The fixed costs (related to farm structures and machinery) were comprised of depreciation and interest costs. In order to understand the profitability of the beef enterprise as well as the whole farm, the costs and revenues were estimated at three levels: beef enterprise, the whole farm, and the family level. With regards to the beef enterprise, the farm in Cluster Four had the highest level of profitability, at $0.05 per pound of live animal weight sold [or on a per pound sold (PPS) basis]. At the same time, this farm was also able to achieve the lowest GHG emissions, at 2.20 lbs. PPS basis measured in Carbon Dioxide Equivalent (CO2e). The farm with the second lowest level of GHG emissions (9.68 lbs. CO2e on a PPS basis) were estimated for the Cluster Six Farm, which also had the second highest profitability ($0.01 on a PPS basis). When measured at the beef enterprise level, several farms had net GHG emissions. Higher farm level profitability was contributed by a high weaning weight, the lower cost to produce feed, and the strategic purchase of machinery to feed each herd. Lower emissions were noted on farms with tame pastureland and greater amounts of forage with alfalfa. Comparing profits and GHG emissions at the whole farm level showed different results. The Cluster Seven farm had the highest level of profitability ($1.53 on a PPS basis) while it was also the largest contributor to GHG emissions (12.16 lbs. CO2e on a PPS basis). Cluster Six farm was the second largest contributor to GHG emissions (7.54 lbs. CO2e on a PPS basis), but also created the least profit on its farm ($0.13 on a PPS basis). The farms with net sequestration (i.e., GHG emissions were negative) were Cluster Four and Cluster One farms. Both of these farms were both able to create profitability. On a PPS basis, Cluster Four farm had the second highest profitability ($0.80 on a PPS Basis) and sequestered second greatest emissions (2.38 lbs CO2e on a PPS basis). Cluster One farm had the second lowest profitability ($0.33 on a PPS basis) and sequestered the most GHGs (30.17 lbs CO2e on a PPS basis). Increases in the level of net sequestration were due to tame pastureland and large amounts of unused hay growth which included legumes such as alfalfa. Increases in profitability were due to the sale of non-feed grains, feed grains or hay, as well as other factors noted above regarding the beef enterprise. These findings suggest that Manitoba beef producers could provide greater profitability and lower GHG emissions if they increased their weaning weights, increased the size of their herds, invested in tame pastureland when possible, and cut their forage several times throughout the growing season. Since this study is based on a single farm from four clusters, additional research is necessary. This may include studying several farms in each cluster in order to determine variability in long-term feed production, as well as in costs and revenues.
beef, cattle, profitability, greenhouse gases
Master of Science (M.Sc.)
Bioresource Policy, Business and Economics