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The Economics of Novel Endophyte Tall Fescue

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Posted Dec. 1, 2010

Over the past two decades, forage breeders in the Forage Improvement Division at the Noble Research Institute have worked diligently to develop a cool-season perennial forage that is more economical than the annual cereal forages commonly grazed in south-central Oklahoma and north-central Texas. A summer-active variety of tall fescue (known as PDF-584) was developed to make use of a novel endophyte that produces chemicals that protect the plant from pests and diseases. However, it does not produce the toxin that causes fescue toxicosis in livestock. A five-year, on-farm, grazing study was conducted at the Noble Research Institute's Headquarters Farm in Ardmore between the fall of 2005 and the spring of 2010 to investigate the economics of this new fescue.

Table 1 reports average animal performance measures and the expected values for costs, returns and net returns for the rye-ryegrass and tall fescue grazing systems. We found that steers grazing the annual rye-ryegrass system attained 25 more days of grazing per acre than the steers grazing the novel tall fescue. In addition, steers grazing the annual system gained, on average, 0.27 more pounds per day than steers grazing the perennial tall fescue. These two factors resulted in less animal performance on the tall fescue system compared to the rye-ryegrass system; that is, the tall fescue resulted in 129 pounds less total gain per acre than the conventional system.

When the establishment costs associated with fertilizer, pesticides, tillage and planting are amortized over the five-year life of the stand, the tall fescue system was about $48 per acre (or 27 percent) less costly than the annual rye-ryegrass system. This cost difference implies that fewer hours of a producer's time are required for the tall fescue system each year.

Because the average cattle placement and removal dates varied so much between systems (Table 1), the prices associated with purchasing and marketing cattle also varied. As a result, the value of gain used to compute revenue per acre favored the tall fescue system by $6/cwt. This difference in price helped offset some of the losses in revenue due to having fewer grazing days. However, on average, steers grazing the rye-ryegrass system realized about $74 per acre more revenue than steers grazing the novel tall fescue.

When benefits and costs were considered together in this study, the annual rye-ryegrass system generated $25 of net return per acre more than the novel tall fescue system. However, sensitivity analysis revealed that this difference in net return was most sensitive to the assumption made in the study about the longevity of the tall fescue stand. It was determined that if a producer can establish and maintain the tall fescue for a minimum of 12 years, instead of five, then the economic difference between the novel tall fescue and the rye-ryegrass systems becomes insignificant.

In our study, we have found that the tall fescue stands have persisted under extreme growing conditions, including excessive drought in the spring, summer and fall of 2006; excessive flooding in the summer of 2007; and multiple periods of freezing rain and snow in 2009 and 2010. It is our opinion that, when properly managed, the tall fescue forage can be maintained well beyond 12 years. We intend to confirm this hypothesis by indefinitely managing stands of novel tall fescue that were established on our farms in 2005.

Please feel free to contact me with any questions regarding this study at jtbiermacher@noble.org.