Stochastic dominance analysis of returns to stocker grazing on conservation tillage winter wheat forage in Arkansas

Abstract

Grazing cattle on winter wheat is a common income-generating practice in the Southern Great Plains, but few Arkansas cattle producers utilize this practice. Many areas in the state with potential to benefit from this practice are highly erodible, and conservation tillage may be needed to best ensure the existing natural resource base is not degraded over time. This study evaluates the profitability and return variability of grazing stocker steers on conservation tillage winter wheat pasture using simulation and stochastic dominance analysis. Average daily gains are simulated for steers grazed on conventional tillage, reduced tillage, and no-till winter wheat pasture using seven years of steer weight gain data from a conservation tillage winter wheat forage study near Batesville, Arkansas. Steer prices and prices for key forage production inputs such as diesel, fertilizer, and glyphosate are also simulated to account for their stochastic impacts on return variability. Steer net return distributions are generated for each tillage system, and first and second degree stochastic dominance are used to rank each tillage system according to specified producer preferences. The results indicate both conservation tillage systems are more profitable and less risky than the conventional tillage system. The conventional tillage system is dominated by no-till based on first degree stochastic dominance and by reduced tillage based on second degree stochastic dominance. Thus both conservation tillage systems would be preferred by risk-averse cattle producers to the conventional tillage system based on this analysis.