Resource information
A scattered structure of small pastures has negative effects on profitability in beef enterprises because small enclosures result in high labor costs per livestock unit. Moreover, larger enterprises distribute the costs across more livestock units and hence achieve lower operating costs. Creating larger coherent pastures makes it easier to increase herd size and yields positive effects due to economies of scale. This study on five Swedish organic cow-calf enterprises examined how profitability is affected by creating larger pastures from small scattered pastures and adjacent forest land. Additional income, additional costs, reduced income and reduced costs were taken into account using a partial budgeting technique. A change to larger coherent pastures was found to be profitable for all enterprises examined. Agri-environmental payments and supports were the most important benefit from creating larger pastures, followed by income increases and cost reductions resulting from economies of scale and improved consolidation. Income reductions due to premature final felling (clearcutting of forest land) and the opportunity cost of forest land did not have a major influence. To conclude, creating large coherent pasture-forest mosaics by merging small scattered enclosures is profitable for Swedish organic cow-calf enterprises.
