Economic evaluation of harvested forage demand in beef cattle in the prairie provinces

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Beckman, Chris
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This thesis investigates the demand for harvested forage in beef cattle on the Canadian prairies. Currently, little information exists on demand for forage on the prairies because of the lack of a central "open" market. However, most of the forage produced in Manitoba, Saskatchewan and Alberta is consumed by beef cattle. This study investigates two sources of change in forage demand in beef cattle, substitution within rations and variation in livestock populations. An aggregate forage demand model is estimated, employing data generated from two submodels. The first, a least-cost ration model, calculates the quantity of forage consumed under different economic scenarios. The second, a livestock inventory model, estimates livestock population based on a lagged livestock/barley price ratio and lagged real interest rates. Aggregate forage demand is then estimated and tested for stability under a number of different economic scenarios. The results indicate that under typical economic scenarios the demand for harvested forage is stable and ranges from 6 to 10 million tonnes per year. Forage demand in beef cattle is primarily for low to medium quality forage, with high quality forage being consumed in high forage price / low grain price scenarios. The forage price elasticities are -.67, .54 and 1.0 for the forage price, grain price and population variables, respectively. Any attempt to expand forage consumption in beef cattle should focus on expanding livestock populations, rather than substituting forage for grain in the rations of beef cattle.