Livestock Economics for Western Producers

Livestock Economics: What Attributes Bring Higher Prices?

 

By Laurie Greene, Editor

 

At the 100th Annual California Cattlemen’s Association (CCA) & California CattleWomen’s (CCW) Convention last week in Sparks, Nevada, Tina Saitone, cooperative extension specialist, UC Davis Department of Agricultural and Resource Economics, described her research on rangeland and livestock economics. “Primarily, my focus has been on cattle — beef cattle to date — but I’ve also started some projects recently with sheep producers and the predator interactions they have specifically with coyotes. I am examining whether or not [producers] can use nonlethal depredation methods to mitigate those losses.”

“Right now, I have been concentrating on marketing characteristics of cattle,” she said. “I study those practices employed by producers, such as when they wean their cattle; how many vaccinations they have; whether they market [their cattle] as natural, grass-fed, or organic; and the impact that [these choices] have on their prices.”

Tina Saitone
Tina Saitone, cooperative extension specialist, UC Davis Department of Agricultural and Resource Economics

Interestingly, Saitone and her colleagues have mainly been using satellite video auction data. “Western Video Market Auction actually held their auction this month here in Sparks, Nevada because they can do it at different locations all the time. So, we use that data to figure out cattle characteristics and then determine the marginal impact that each of those characteristics has on price,” said Saitone.

Characteristics such breed, frame score, flesh score, and weight, are definitely controls in Saitone’s research model because those are main drivers of price. “But what we want to do is figure out — holding all those things constant —if a producer raises their cattle natural, what kind of premium does that bring them? We’re really looking for that incremental difference.”

One might expect certain factors such as natural or organic, to deserve a higher price, but there always has to be a buyer. “Right now, when prices are low relative to 2014 and early 2015, ranchers do have some opportunities to get some higher prices in what we would call niche markets. Consumers are increasingly demanding a wider range of characteristics. They want grass-fed. They want organic. They want natural, no hormones. All of these are what we would call credence attributes. If you go to the grocery store and you taste a steak, you probably don’t know if it was raised natural.”

Accordingly, the industry has third-party certification to assure consumers that when they pay a higher price for that product they are actually getting those traits. “Farmers actually have the ability to fill some of those niche markets that consumers have created with their demand and possibly get higher prices than just selling into traditional commercial channels.”

The data that Saitone has been looking at from Western Video is focused on Western states, including California. Certainly, location places Western producers at a persistent disadvantage because the majority of the processing capacity is in the central part of the country, with Nebraska being the hub. Saitone said, “When you think about cattle being raised in California having to be transported all the way to Nebraska, some 1600 or 1700 miles, not only do you have the cost associated with that transportation, but you also have shrink; you have mortality.

California Cattlemen’s Association (CCA)

California CattleWomen

UC Davis Department of Agricultural and Resource Economics

More California Ag News

BIG WATER RALLY SCHEDULED FOR JAN. 16! Thousands Needed To Participate In Big Water Rally on Jan. 16  
Solano County 4-H Clubs Win Big at Skills Day When Life Gives you Lemons, Make Lemon Curd! Showmanship winner Tyler Scott of the Wolfskill 4-H Club DIXON--Tyler Scott of the...
California Ag News UC To Help Ranchers UC to Help Ranchers Survive Winter 2013-14 The first agricultural operations to feel the impact of a drought are dryland ranchers, many of whom r...
MONTEREY FARM BUREAU WARNS CPUC ON WATER ISSUES Desalination Plant Could Jeopardize Groundwater Supply California American Water could threaten the ground water supply of the Salinas Valley where u...

UC’s Karen Klonsky Retires

Karen Klonsky Retires, Gets Major Credit for CA Agricultural Cost and Return Studies

By Patrick Cavanaugh, Deputy Editor and Laurie Greene, Editor

 

This is an exclusive interview with Karen Klonsky, UC Davis Cooperative Extension specialist emeritus, in the UC Davis Department of Agricultural and Resource Economics. Her expertise has been farm management and production, sustainable agriculture and organic agriculture.

CAT: Congratulations on your recent retirement!UCANR 100 years logo

Klonsky: Thanks Patrick. I retired on July 1, 2015, after 34 years. I started at UC Davis in ’81, straight from graduate school.

CAT: What has been your primary research interest?

Klonsky: My primary research areas are sustainable and organic agriculture. I have approached these subjects from several dimensions, including the economic feasibility of alternative farming practices, the size and growth of organic production in California, and factors influencing the adoption of alternative farming systems.

CAT: Wow, what a great career! I understand your interest in alternative farming systems began with your dissertation work comparing alfalfa systems with integrated pest management.

Klonsky: I studied agricultural economics in graduate school and started working with a professor in my department who had a joint appointment in agricultural economics and entomology. And I just became very interested in that research area.

I worked with entomologists and researchers on a computer model of plants and alfalfa weevils, and their interaction, plus a management component. I studied the plant and bug components, then did the management part and imposed it on top and asked, ‘If you did this, how many bugs would die?’ The plant model showed how much the alfalfa would grow, and at what point you could cut the alfalfa and achieve the desired yield. I never actually did any fieldwork.”

CAT: Since 1983, you not only directed ongoing Cost and Return Studies, but the development of an entire archived library of Cost and Return Studies for the UC Davis Department of Agricultural and Resource Economics. You recently completed studies on pistachios and walnuts, right?

Klonsky: Yes, both “Sample Costs to Establish and Produce English Walnuts In the Sacramento Valley, Micro sprinkler irrigated” and “Sample Costs to Establish and Produce Pistachios In the San Joaquin Valley-South, Low-Volume Irrigation.”

Our library contains studies about field, tree and vine crops and animal commodities. But since I retired, Dan Sumner, director, University of California Agricultural Issues Center and Frank H. Buck, Jr. Distinguished Professor for the Department of Agricultural and Resource Economics has taken that over and I continue to be peripherally involved.

CAT: These cost studies have been recognized worldwide.ARE Cost and Return Studies

Klonsky: Yes, and it has been very gratifying work. We decided to put them online routinely, and we have had a million downloads per year. Around 2005, Pete Livingston, my staff research associate, got the idea of scanning in the older studies. All of the newer studies were in electronic file format, so posting was easy. However, most of the older studies were paper copies, so we got a grant to scan and add them to our new online archive.

CAT: What was the most interesting thing about doing those cost studies?

Klonsky: I loved doing those studies. I really learned a lot because all cost studies are done directly with farmers we met through county farm advisors. I really got to know what farmers were thinking about and what their options were.

CAT: So those were real costs, not university costs?

Klonsky: Those were not university costs. The farmers tell us what equipment they will use, and then we calculate the cost of using their equipment—the fuel used to operate the equipment and the repair costs—with an agriculture-engineering program.

CAT: Do you have a math background?

Klonsky: Yes, I got my bachelor’s at the University of Michigan in mathematics. It was very helpful.

CAT: And you also earned your Ph.D. at the University of Michigan?

Klonsky: Yes.

CAT: So did you grow up in Michigan?

Klonsky: No, I grew up in New York.

CAT: And you just had an interest in going to Michigan State University?

Klonsky: Well, I had an interest in agriculture because I had an uncle who farmed corn and vegetables in upstate New York. We would go up there and I thought it was the most wonderful thing in the world.

CAT: What were some of the highlights of your career?

Klonsky: For many, many years, I was involved in the long-term on-campus sustainable agriculture research on land that is now on Russell Ranch, but it started as Sustainable Ag Farming Systems. We looked at four different farming systems, organic, low input, high-input, and we did a lot of analyses with cover crops and rotations. It was great to work on that project.

CAT: And you worked with USDA on the trends of organic farms?

Klonsky: And then I worked quite a bit with Department of Food and Agriculture on using the registration data for their organic farmers to compile statistics about how many farmers they had, what they grew, and the number of acres they planted with each crop. They had this database, which started in 1992 I believe, but they weren’t using it. Now the most recent registration analysis is available for 2012.

CAT: Just to try to get more data on the organic movement and organic growth?

Klonsky: Yes, because there was no data at all about it. Now NASS (National Agriculture Statistics Service) conducts a nationwide Organic Census, in addition to the regular Census of Agriculture.

CAT: I understand you served as an editor of the Journal of American Society of Farm Managers and Rural Appraisers (ASFMRA). What did that entail?ASFMRA

Klonsky: Yes. I did that for many years. ASFMRA is a national organization. The Journal of the ASFMRA comes out annually. As editor, I corresponded with the authors, assigned reviewers, and ultimately, accepted or rejected submissions, like any journal.

CAT: Did you travel a lot with your work and presentations?

Klonsky: You know, not so much, I went to Spain one time and France once for work. But I did travel around domestically to symposiums and conferences to speak on the economics of growing a lot of different crops, including many presentations at the EcoFarm Conference.

CAT: You worked and collaborated with some really interesting people.

Klonsky: Most of my important collaborations were conducting trials with people in other disciplines. For instance, at Russell Ranch, I was the only economist involved in the collaboration with plant pathologists and pomologists who ran trials to discover fumigation alternatives in the preplanting of trees.

Then I worked with people at UC Santa Cruz on alternatives for strawberry fumigation. Most of my work has been interdisciplinary.

CAT: California farming in general is huge, diverse industry. We produce 60% of the fruits and vegetables, and nearly 100 percent of the nut crops that people across the country consume. Any comments on that and on how valiant and resilient farmers are to get through year after year, particularly lately with the drought and the lack of water deliveries?

Klonsky: When I first started, there was a land price bubble, and there were a lot of bankruptcies because people had these land payments they just couldn’t pay.

It was kind of like the mortgage crisis that housing saw in 2008, agriculture saw in the early 80s.

CAT: So as you have been editor for the Journal of the American Society of Farm Managers and Rural Appraisers, you see land values going up and that keeps agriculture strong—the high land values, right?

Klonsky: Well, but it keeps it expensive. So now there is more and more leasing of land. As farmers retire from permanent crops, they have an orchard, but they don’t really want to sell it, so they lease it.

CAT: There you go. Keep it somehow in the family.

Klonsky: Yes, they try to keep ownership in the family. Or what we see also are these development leases where a young farmer can’t afford to buy the land, so they lease the land, but they pay for the trees to be planted.

CAT: So you are still coming to your office at UC Davis?

Klonsky: I am officially retired, but we have what we call a ‘partial recall’ where you can do things if you have funding. I have a project along with Rachel Goodhue, Professor, UC Davis Department of Agricultural and Resource Economics, with the California Department of Food and Agriculture, funded through the California Department of Pesticide Regulation. The Department of Pesticide Regulations is required by law to do an economic analysis of all proposed new regulations. So that is what I am working on.

CAT: Give me a couple of examples. VOC regulations?

Klonsky: Yeah, we do VOC.

CAT: Are you looking at sustainable groundwater legislation?

Klonsky: No, just pesticide regulation. It is funded by the Mill tax on pesticides.

CAT: Did you work with a lot of graduate students at UC Davis?UC Davis Graduate Studies

Klonsky: Oh yeah, I worked with a lot of graduate students coming through. One of them was on different ways of pesticide management on eucalyptus trees. I said I went to Spain. On that trip, I spoke about growing eucalyptus for firewood.

CAT: That was an economic study, wasn’t it?

Klonsky: Yes it was. They grow it not for firewood, but for paper. But that never really caught on here.

CAT: Are you bullish on agriculture? Do you think Ag is going to continue thriving in California?

Klonsky: Oh, sure. Oh, sure. But I think that the water situation is definitely real, and I think agriculture already has definitely made tremendous strides in irrigation systems, especially the subsurface irrigation in vegetables, in particular processing tomatoes, which I worked on.

CAT: That was a huge improvement in growing tomatoes. And people didn’t think it was going to work, but it turned out to be fantastic.

Klonsky: Yeah, a really win-win on that one. And orchards are getting more efficient. If you look at the water per pound of crop produced, you see major improvements with water efficiency.

CAT: Absolutely. Of course, most plants transpire most of the water they take up through the roots, up through the leaves and the stomata cells. By the way, do you have any interesting stories regarding your career?

Klonsky: It’s not the highlight, but the weirdest thing of my career is I got an email from somebody in Ministry of Agriculture and Fisheries from the United Arab Emirates. They wanted me to give a live presentation about Cooperative Extension in California and how it’s organized.

So I had to go to this office building in downtown Sacramento at 10:00 at night because of the time difference. I went into a conference room that had a special kind of projector so I could see them and they could see me. And on the monitor I see all these men walked in—they were all men—and half of them were in Western dress and half of them were wearing a Sheik-like headdress, with a band that sits on top and holds it on.

That was crazy, just being downtown after everybody is gone and the whole building was dark and quiet, except the one room that I was in.

CAT: How long was the presentation?

Klonsky: Gosh, maybe an hour.

CAT: You needed to do some research for that presentation?

Klonsky: Yeah, I had to do some research, I had to think about Cooperative Extension in a different way—the big picture. 

CAT: Keep up the good work, and I hope you are enjoying retirement.

Klonsky: Yeah, I come in two days a week, so it is nice to see everybody. I still get a lot of emails, which I need to answer.

More California Ag News

Strawberry Meeting Focused on Fumigants, Pest Cont... Fumigation Was Big Topic at Santa Maria Strawberry Meeting   New laws and regulations on fumigation for Santa Barbara and San Luis Obispo Co...
SANTA MARIA VEGETABLE MEETING Central Coast Meeting:  Updates Growers/PCAs on Pests and Diseases By Patrick Cavanaugh, Editor, and Laurie Greene, Associate Editor Crowd ...
Cooperative Extension Turns 100 May 8 Barbara Allen-Diaz, University of California Vice President, Division of Agriculture and Natural Resources, talked with California Ag Today about the ...
UC Davis Professor Suggests Update to Agricultural... There is a Growing Network of New Technology to Update Cooperative Extension and Help California's Farmers By Diane Nelson, Senior Writer, UC Davis...