Integrated crop–livestock systems and beef cattle: risk and economics assessments

Abstract

Context Soybean cultivation is advancing over areas traditionally used for livestock production in southern Brazil, which has led producers to decide whether to diversify their production system or keep it specialised. Aims To evaluate the economic returns and risk for beef cattle production, as a specialised activity or an integrated system with soybean, in a high-risk region for soybean crop failures in southern Brazil. Methods Using a stochastic model, we evaluated the gross margin per hectare, the risk of negative gross margin per hectare, and the contribution of input variables to the gross margin per hectare variance. Therefore, the following three production systems were simulated: beef cattle production (BP), beef cattle production associated with leasing land for soybean cultivation (BSL), and beef cattle production with soybean cultivation (BSC). Key results All systems had a positive average gross margin per hectare, with BSL (US$125.69) having the highest average, followed by BSC (US$77.82) and BP (US$69.54). The highest difference between maximum and minimum values of gross margin per hectare was observed in the BSC, which was the only system to present a negative gross margin per hectare. This is owing to the high variation in the gross margin per hectare generated by soybean production activity, which made BSC the system with the greatest risk. Beef cattle average productivity from the integrated systems was 50% higher than the average observed in BP, with the minimum values in BSL and BSC being only 5.84% lower than the BP average. The risk components linked to soybean productivity (69.54%) and sale prices (17.32%) explained 86.86% of the variation in gross margin per hectare in the BSC. In BP and BSL, stocking rates (40.06% and 42.85% respectively) were the components with the greatest effect, followed by male and female selling prices, which explained 78.13% and 76.71% respectively, of the variation in the gross margin per hectare. Conclusions The system with the most significant balance between risk and economic return was BSL, with a higher gross margin per hectare than in BP and lower risk than in BSC. Implications Understanding the risk for negative economic results and the factors that affect the gross margin per hectare will help farmers decide whether to integrate soybean cultivation with beef production. These results will help inform the structure of the integration, and implementation of risk mitigation and loss minimisation strategies.