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Economic Evaluation of Forage Quality Gains—Past and Future

Dep. of Agricultural Economics and Rural Sociology, The Pennsylvania State Univ., 201 Armsby Building, University Park, PA 16802

^* Corresponding author (steveford{at}psu.edu).

Annual returns to society from agricultural research have historically been very high, generally in excess of 20%. Estimates of returns to forage researcha re likely similar in magnitudea and must also include consumer benefits, the economic value of changes in environmental impacts, spillover research benefits, and complementary on-farm effects. The estimation of returns to improved forage quality involves more than an analysis of enterprise costs and returns and must also account for whole-farm effects. Annuale xpenditures for forage quality research are estimated to be approximately $125 million, roughly 2% of total U.S. agricultural research. Total allocation of forage quality research expenditures to the dairy sector would cost consumers only 0.22 cents L–¹ milk. This amount is also equivalent to a 10 g crude protein kg–¹ increase over only 18% of all hay harvested in the USA. A whole-farm dairy optimization model provides results of potential farm-level impacts of improved forage quality and illustrates the complexity of determining on-farm benefits to forage quality improvement. Forage quality attributes that limit farm profitability are identified to be crude protein, undegradable intake protein, neutral detergent fiber, and dry matter intake. Average dairy farm potential of forage quality increases exceeds $3000 annually because of expanding hay acreage in addition to improved quality. However, very high quality forage may have a negative impact on profits because of off-farm feed purchases to provide additional fiber. Gains from improvement in forage quality will be greater as commodity prices and intensity of animal agriculture increase.

Received for publication March 31, 1998.