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CHAPTER 7 - ECONOMIC ANALYSIS OF ANIMAL PRODUCTION BASED ON CROP RESIDES


Zhang Cungen
China Academy of Agricultural Sciences

Introduction

The economic benefits of using untreated and treated crop residues as feed for ruminants mainly depends on the source and cost of crop residues, cost of treatment, cost of urea or other ammonia source, on the price of protein supplements, as well as on agricultural production and technical levels and other factors. In relation to the potential of crop residue use, countries can be divided into four types:

Type 1 are developing countries and regions with a high population density. Most countries in the Far East and part of the Middle East belong to this group. Crop residues in general are used as the major feed for ruminants. Treated crop residues may result in very good economic returns.

Type 2 are developing countries and regions with low population density. Most countries and regions in Africa and Latin America where land use is not restricted belong to this type. Feed supply comes from various sources, but cattle production relies, in general, on natural pastures. Crop residues, treated or untreated in emergency situations, especially in the dry season, become an important feed resource.

Type 3 are developed countries and regions with an ample grain supply. The USA, Canada and France belong to this type. In addition to roughage, ruminants are fed with large quantities of concentrates to obtain high yields of animal products. Untreated crop residues are sometimes used as a source of fibre substituting hay or silage. Under these conditions, treated crop residues might give fairly good economic benefits. However, it might not be economical to utilize crop residues in areas where the production of hay or silage is high.

Type 4 are the developed countries and regions with small land area per capita. Most countries in north Europe belong to this type. In order to achieve self-sufficiency in food, the governments of these countries attach great importance to the utilization of crop residues so as to increase food output from the limited land. Among north European countries, Denmark and Norway use the highest proportion of crop residues as feed.

In China, the broad agricultural region, characterized by huge population with limited land, belongs to Type 2. It has good prospects for developing animal husbandry based on crop residues.

Status of the utilization of crop residues in China

In general, straw is used for burning, composting, paper making and animal husbandry. For a long period in the past, due to limited economic development and way of life, it was very popular to use straw as fuel for cooking. It is estimated that 70 percent of total straw was used as fuel. With the improvement in the rural economy and farmers' living standards, rural energy has become diversified to coal, natural gas, biogas, electricity, etc., so the amount of straw used as fuel has been reduced to less than 50 percent. Direct straw application to soils is also practised, but this operation increases the cost by about ¥ 10 per mu (¥ 150/ha). At the same time, it takes time for straw to fully decompose, thus interfering with germination and growth of the next crop. This is particularly true in regions with intensive agriculture because it increases the difficulties for crop rotation. In addition, returning straws directly to the field may have hidden dangers in terms of insects and diseases, so this utilization has its limitations. Returning straw to fields wastes the energy, decomposed by micro-organisms, while crops can only utilize part of the N, P, K and other inorganic nutrients after decomposition.

Another use for straw is as raw material for paper making. It is estimated that 2-2.5 tonne of rice straw can be processed into 1 tonne of paper. However, it is difficult to collect due to the large volumes involved and its disperse distribution, and only part of the rice straw can be utilized. Since 1995, the State has shut down many medium- and small-sized local paper plants due to environmental pollution. The closure has led to a surplus of straw.

In many regions of China, large amounts of unused crop residues are piled up by field edges and road sides, and extensive burning of straw by farmers in the fields occurs every autumn at harvest. This has caused a drop in soil organic matter, hardening and producing impervious soils with low moisture holding capacity. It has also caused atmospheric pollution and poor air visibility. In May 1997, due to smoke produced by burning of wheat straw, the Chengdu Shuangliu Airport was closed for 4 hours. Visibility had dropped below the minimum safety limits required for flying. Twenty-two flights had to be diverted to another airfield and eight flights were delayed. At Hebei Shijiazhuang Airport there were also flight delays, and on the Jinan-Qingdao motorway there was an increase in traffic accidents, both due to the burning of crop residues. Therefore, each province has set regulations strictly prohibiting the burning of straw, but straw burning still occurs, despite regulations and repeated disciplinary action. It is estimated that about 40 to 45 percent of the crop residues are still used as fuel or burned on the hillsides yearly, equivalent to over 1.2 million tonne of N, 280 000 tonne of P and 2.8 million tonne of K (Table 7-1), resulting in both environmental pollution and energy waste. In these regions, straw has become a significant cause of environmental pollution.

Table 7-1. Nutrition elements in straw

Year

Straw output
(× 106 tonne)

Nitrogen
(× 104 tonne)

Phosphorus
(× 104 tonne)

Potassium
(× 104 tonne)

NPK as proportion of total chemical fertilizer output of China

1997

600

300

70

700

25 %

SOURCE: Lu Ming, 1998.

One of the best methods to prevent environment pollution caused by straw is to develop livestock production based on straw and to return manure to the fields. In other words, turn the organic and inorganic nutrients contained in straw into high quality products (meat, milk, skin, wool) and bio-energy (animal power) via ruminants. The manure, which can not be directly utilized by humans, can be returned to farmland. Most of the nutrients needed by crops can be met by animal manure. Long-term applications of manure can increase soil organic matter and improve soil structure and fertility, which are beneficial for the establishment of a highly efficient virtuous circle of agricultural production and ecology. If manure is used to generate biogas via fermentation as a source of rural energy, and the effluents returned to farmland, the energy flow would become even more rational.

Chinese farmers have a tradition of using straw to feed herbivores, for example, chopped straw for cattle. However, scientific experiments have shown that chopping or milling can not improve straw digestibility: it can only increase intake and reduce feeding losses. In the past, most cattle farmers used animal traction and fed straw and other roughage during slack seasons and some concentrates during busy seasons. In this case, cattle could not develop strong body condition and used to be called "old yellow cattle" at the end of their lives. Cattle with less flesh was a direct result of this production method. At present, animal draft power has been gradually replaced by machinery and animal numbers. However, the improvement of cattle should not only be put on the agenda, but also on the work plans, since it is absolutely possible to obtain meat from cattle.

Turning draught cattle into beef cattle is not simply a change in the feeding objective; matched feeding methods must be implemented. The recently proposed strategy of "relying on science and technology for the utilization of straw at a higher level for the development of herbivorous animals" depends on innovative feeding methods. The two projects on developing cattle production based on straw as the major feed, undertaken by FAO in 1990 and 1992, achieved their desired objectives.

Experts from FAO recommended cattle production based on straw as a low-concentrate and long-cycle feeding system. In other words, it aimed to take advantage of the digestion characteristics of ruminants, and particularly the fact that straw in China is a non-commercial feed in most cases, to use more roughage and less concentrates to obtain a market animal through a long-cycle finishing process. Straw was used as roughage, and processed and treated with ensiling and ammoniating technologies as major methods. It was essential to profit from this opportunity to develop a new alternative for straw utilization work in China.

With the intention of taking advantage of the rich straw resources of the country, the State started the demonstration projects Developing livestock production with straw and returning manure to fields, after digestion by livestock in the large agricultural regions in 1992. The project had found a practical way to reduce straw burning. In the short period of 8 years, important advances were achieved. The extension of ensiling and ammoniating technologies has obviously accelerated the rate of straw utilization in China. In general, once crops mature, the straw has become dry and inappropriate for making silage. In this case, ammoniation is the way to improve the nutritional value of straw. China started late in the extension of straw ammoniating technology (1985) and did not undertake the basic research and experimentation until the early 1980s, but in comparatively few years the country made significant progress in straw ammoniation. Thus, total straw feeding increased from 20 percent in 1992 to 28 in 1996. The utilization of treated straw rose from 4.2 to 9.5 percent. In 1996, a total of 85.2 million tonne of silage and 80.5 million tonne of ammoniated straw were made in China. Based on the equivalence of 5 kg of ammoniated maize stalk or 2.5 kg of ammoniated wheat straw in N content to 1 kg of maize, more than 20 million tonne of grain had been saved. The feeding rate of straw in Hebei Province reached 49 percent in 1997. This included 6.93 million tonne of silage (fresh weight) and 2.45 million tonne of ammoniated straw. In other words, about half of the straw in the whole province was utilized for livestock. This played an important role in alleviating environmental pollution caused by burning. Table 7-2 shows the situation of straw utilization in pilot counties and villages.

Table 7-2. Straw utilization in pilot counties and villages

Place

Year

Farm area
(x 103 mu)

End-of-year population
(x 104)

Cattle marketed
(x 104y/r)

Straw dry matter
(x 104 tonne)

Fed as % of all straw

Output

Fed

Ensiled & treated

Shandong Province

Yucheng county

1997

803.3

22

12

100

40

33

40

Maozhuang village

1997

1.2

0.06

0.03

2.08

1

0.04

48

Tangwang village

1997

1.6

0.08

0.04

2.77

1.2

0.04

45

Hebei Province

All province

1997

98 000

661.7

429.6

3 000

1 470

200

49

Sanhe county

1998

530

11.13

17.19

66

34.5

20

52

Henan Province

Huaiyang county

1992

951.1

22.6

6.45

118.4

54.4

1.32

46

SOURCES: The Animal Husbandry Bureau of Yucheng County; the Animal Husbandry Bureau of Henan Province; Animal Husbandry Bureau of Sanhe County.

Progress on development of Straw for ruminant feed in China

The development of cattle production nationally and in the Central Plain Provinces of Henan, Shandong, Anhui and Hebei in recent years reflects the current status, the prospects and the economic benefits of the development of livestock production based on straw in China. In these provinces, there are important agricultural regions for grain and cotton, rich in straw and cottonseed. Since 1978, when the country started to implement the open and reform policies, but especially since 1987, these provinces have extended, in a large manner, the technologies of straw ammoniating and ensiling, as well as the necessary matching feeding techniques, which has greatly promoted cattle production development. Shandong Province, for example, had invested a total of ¥ 200 000 million and 40 000 tonne of urea, and produced a total of 3.44 million tonne of ammoniated straw by 1993. Cattle have shown the fastest population growth of all animals except poultry, and these four provinces had the fastest increase. This shows that cattle production based on straw is profitable. At national level, the cattle population reached 124 million in 1998, a 73 percent increase from 1980. During the same period, the cattle population in Henan, Shandong, Anhui and Hebei Provinces nearly doubled, an increase of 15.4 percentage points in the nation (Table 7-3).

Table 7-3. Cattle population in the Central Plain Provinces 1980-1998 (x 104 head)


1980

1990

1998

1990/1980

1998/1980

All China

7 169

10 288

12 435

1.44

1.74

Henan

340

893

1 301

2.63

3.83

Shandong

218

512

912

2.35

4.19

Anhui

241

501

627

2.08

2.60

Hebei

121

208

665

1.72

5.51

The four provinces

919

2 133

3 504

2.32

3.81

As proportion of all China (%)

12.8

20.5

28.2

-

-

SOURCE: China Statistical Yearbook, 1997 and 1999

Second to poultry meat, beef showed the largest increase within total national meat output. China had a beef output of 4.8 million tonne in 1998, 17 times that of 1980. Beef output was 26 000 tonne in 1980 in Henan, Shandong, Anhui and Hebei Provinces, only 9.7 percent of the nation; by 1998, it had reached 2.3 million tonne, or 47.7 percent (Table 7-4), an increase of 87 times compared to a 10 times increase nationwide. This fully demonstrates the efficacy of extending the technology of developing livestock production with straw and returning manure to fields, after digestion by livestock in the four provinces.

Table 7-4. Beef output in the Central Plain provinces during 1980-1998 (x 104 tonne)


1980

1990

1998

1990/1980

1998/1980

All China

26.9

125.6

479.9

4.7

17.8

Henan

0.7

18.2

76.7

26.0

109.6

Shandong

0.9

17.6

60.1

19.6

66.8

Anhui

0.6

9.8

34.3

16.3

57.2

Hebei

0.4

5.6

58.0

4.7

145.0

Total for four provinces

2.6

51.2

229.1



As proportion of all China (%)

9.7

40.8

47.7



Extraction rate, average carcass weight and annual beef yield per head in China have much increased since 1980. In that year, extraction rate was 4.7 percent, carcass weight was 81 kg and annual yield per head was 3.8 kg. In 1990, these parameters were 10.8 percent, 115 kg and 12.5 kg, respectively, and by 1998 they were 30.7 percent, 133.5 kg and 41 kg. In 1980, the corresponding values for the four provinces were below the national average, but by 1990 they were already above (Table 7-5). These data demonstrate that the extension of technology for cattle production based on straw greatly improved production in the four provinces.

Compared with other countries, cattle production in China still has a long way to go. Dressing percentage of cattle in China is lower than in the developed countries, indicating the potential for improvement.

Table 7-5. Change in beef production level in the Central Plain provinces (1980-1998)



Marketing rate (1)
(%)

Average carcass weight
(kg)

Beef yield per cattle(2)
(kg)

1980

1990

1998

1980

1990

1998

1980

1990

1998

All China

4.7

10.8

30.7

81.0

115

133

3.8

12.5

41.0

Henan

2.9

19.1

42.5

70.7

108

139

2.1

20.7

59.1

Shandong

4.0

23.3

45.9

100.9

160

169

4.1

37.2

77.7

Anhui

3.6

17.5

38.1

76.5

112

143

2.8

19.5

54.4

Hebei

4.2

22.2

61.6

74.9

124

152

3.1

27.6

93.7

4 provinces

3.5

20.0

46.0

81.8

125

150

2.8

24.9

69.0

NOTES: (1) Marketing rate = Number of cattle marketed in the year/cattle population by the end of previous year. (2) Beef yield per head = Beef output in the year/cattle population at t h e end of the previous year.

Economics of cattle production on ammoniated crop residues

Cattle production based on straw is only one of the methods of cattle feeding, with certain scope and application conditions. Objective economic analysis of cattle production based on straw usually considers the factors discussed below.

Basic factors influencing the economic benefits

As a complete production system, cattle rearing based on straw has the general nature of an economic activity, i.e., inputs are first, and the comparison between input and output. Only when output is greater than input is there economic efficiency. Figure 7-1 shows the basic input and output factors in cattle production based on straw.

Figure 7-1. Analysis of input-output relations in cattle production based on straw

Implications of major input and output elements and their value

In order to have a complete and accurate understanding of the implications of various essential components during the process of economic analysis, the actual calculating methods for various targets are detailed below.

The benefits obtained from cattle feeding with ammoniated straw can be broken down into direct and indirect benefits. The direct benefits can be further broken down into three.

Income from beef cattle sales

The main income of cattle production is the sale of finished cattle. The key factors are dressing percentage and beef price. The former can be obtained from average values at slaughter, while the latter comes from the market. In the case of live cattle sales, the actual income is used for calculation.

Value of draught cattle

This can be calculated from the days used as a draught animal and the local daily rates; in other words, daily rate (¥/day) multiplied by the time used as draught animal (days).

Value of manure

Manure is a sort of by-product and its value should be estimated. However, it is difficult of do it in practice. After comparisons made in most areas, it is assumed that manure value is offset by labour costs.

Indirect or macro-benefits

They are savings from reduced and controlled environment pollution, reflected in social benefits. The value of these benefits has not been included in the calculations.

There are many essential inputs for cattle production based on ammoniated straw. Some of them are:

The above standard inputs and outputs provide a basis for calculating the economic benefits of cattle production based on straw, but there might be differences in application. For example, the cost or value of straw will change greatly according to time and place. In some regions, straw is regarded as waste with nearly no value, but one has to pay for harvesting, transporting and burning. In other regions, the opposite occurs. In the case of energy shortages and when there is an industrial demand, straw could be used as fuel. With the development of science and technology, straw will be attractive in new building materials and as a raw material for paper making. Therefore the opportunity cost of straw should be considered.

Estimation of economic benefits of use of crop residues for ruminants

In order to simplify the analysis of the economic benefits of cattle production with straw, the input/output ratio has been used to express the critical value of cattle production based on straw. Only when this value is greater than 1 can one can say that cattle production based on straw is effective. The larger the value, the greater the benefit. Any change in quantity or price of one of the essential factors will change the value of the input/output ratio.

On the basis of the above value, it is possible to calculate the total and daily net income per head of cattle, where:

Net income per cattle = Total income per cattle - Total input cost per cattle.

Cases influencing input/output ratio

Beef market objective

For international markets and domestic high-grade consumption, special attention should be given to beef quality. In general, this quality beef needs high-concentrate low-roughage diets for rapid finishing. Beef quality from cattle mainly fed straw will differ a lot from that produced from concentrates. The former can meet beef quality requirements of the common market, while the latter uses very little straw, just to provide the fibre needed for normal rumen function and it does not have to be chemically treated. Trade in high-grade beef is only 2-3 thousand tonne/yr; it is not discussed further here.

For the domestic market, the common cooking method is stewing (red-cooked beef, beef cooked in soy sauce, etc.), which does not require very tender beef. Therefore, this demand can be satisfied with beef coming from low-concentrate, high-roughage systems with a long finishing period. In this case, the roughage can be mainly straw, with better results if chemically treated. Only in this case does the input/output ratio have any significance.

Processing and treatment methods

There are many straw processing and treatment methods, which can be broadly divided into physical, chemical and biological. Economics should be considered when choosing the treatment method. Among the physical methods, chopping is most economical, but does not improve the nutritional value of straw. Among the chemical treatment methods, the alkalization (NaOH) method gives the best results, but the price of NaOH is high. Ammoniation also gives good results and provides non-protein nitrogen, improving the protein level of the straw. Therefore, in the situation of a general shortage of protein resources in China, the ammoniation treatment has its value. In ammoniation, anhydrous ammonia, urea or ammonium carbonate are the major ammonia resources. Anhydrous ammonia is used on large farms all year round. There are great differences in the nutritional value of untreated and ammoniated straw, as well as between ammonia sources. The price of ammonia and the benefits obtained should be carefully considered. It is essential to determine which treatment method gives the best economic benefits.

Age, body weight and breed of finishing cattle

In general, as age and size of finishing cattle increase, daily gain also increases (Table 7-6). From an economic point of view, it is an important issue to select the optimal finishing period.

Table 7-6. Relationship among initial weight, final weight and daily gain


Daily gain (g)

Initial weight (kg)

Final weight (kg)

All test groups

713 ± 90

174

368

Best 10 cattle

894 ± 49

173

418

Heaviest 10 cattle

804 ± 100

234

453

Native yellow cattle in China have better roughage acceptance, and are more suitable for low-concentrate, high-roughage diets and long finishing periods. However, imported cattle breeds have faster growth rates and high feed requirements, and are therefore more suitable for high-concentrate, low-roughage diets for faster finishing.

Protein supplements

When adopting the low-concentrate, high-roughage route, in addition to feeding treated straws, certain levels of a protein supplement should be given to meet the growth requirement of finishing cattle. In the central plain region, cottonseed cake is an optimal protein supplement feed. This is because cottonseed cake does not need detoxification when fed to cattle and it will not compete for demand by other livestock and poultry. However, feeding too much cottonseed cake becomes uneconomical. Figure 7-2 shows the relationship between the amount of protein supplement and weight gain.

Figure 7-2. The feeding effect of treated straw vs. concentrate amount

Comments on production studies

During the period 1990 to 1992, FAO conducted studies and extension work with cattle fed on straw in Henan and Hebei Provinces. Some general comments can be made on the economic benefits of cattle production based on straw, summarizing research reports, data obtained from studies in Henan Province and related economic parameters.

Design of the study

The design of the study was feeding with ammoniated straw ad libitum, with different levels of protein supplement (cottonseed cake (CSC)) for native Yellow cattle, with daily gain changes observed. Table 7-7 gives the results of the experiment.

Table 7-7. Basic data of the study

Amount of cottonseed meal (kg/day/cattle)

0

1

2

3

4

Number of cattle


8

8

8

8

7

Initial weight

(kg)

182

183

183

183

183

Final weight

(kg)

205

237

242

258

262

Daily gain

(g/d)

250

660

750

845

883

Straw intake

(k g/d)

10.0

9.6

8.0

7.3

5.0

SOURCE: Dolberg and Finlayson, 1995

Analysis of economic benefits

The analysis was conducted based on input and output data of cattle raised during the finishing period (from 180 to 450 kg). The analysis was as follows according to different prices of inputs:

Case 1: [email protected] ¥.04/kg and straw free

CSC ration

(kg/day)

0

1

2

3

4

Finishing weight

(kg)

270

270

270

270

270

Finishing period

(days)

1 080

450

360

320

306

Net feed consumption

(kg)

0

450

720

960

1 224

Straw intake

(tons)

1.08

4.32

2.88

2.34

1.53

Income per cattle

(¥)

1 710

1 710

1 710

1 710

1 710

Cost per cattle

(¥)

1 558

1 186

1 202

1 259

1 327


a. Concentrate cost

(¥)

0

180

288

384

480


b. Roughage cost

(¥)

618

246

146

133

87


c. Other costs

(¥)

940

760

768

742

760

Net income per head

(¥)

152

524

508

451

383

Net income per day

(¥)

0.14

1.16

1.41

1.41

1.25

Input/output ratio


1.10

1.44

1.42

1.36

1.29

NOTES:

(1) Finishing weight = final weight (450 kg) minus initial weight (180 kg).
(2) Finishing period is obtained by finishing weight divided by daily gain.
(3) Live cattle sold at ¥ 3.8/kg.
(4) Cattle bought at ¥ 3.6/kg; Concentrate = cottonseed cake at ¥ 0.4/kg. For roughage, the cost of straw is not computed for the time being, only the cost of urea and plastic film used in ammoniation. The cost of urea is ¥ 0.050/kg and the cost of plastic film and labour are ¥ 0.007/kg. Other costs include: cost for buying cattle, disease control and depreciation of cattle sheds.

The net income per cattle and per day mentioned above could be used as the basis for the evaluation of cattle production based on straw. Input/output ratio provides a more comprehensive reflection of the economic benefits of cattle production based on straw. To sum up, when daily feed intake was 1 to 2 kg, better economic benefits could be achieved. When daily straw intake was 1 kg, net income per cattle and input/output ratio were highest. However, when daily straw intake was 2-3 kg, the net income per day was the best.

Case 2: [email protected] ¥.04/kg and straw @ ¥ 0.06/kg

CSC

(kg/day)

0

1

2

3

4

Income per cattle

(¥)

1 710

1 710

1 710

1 710

1 710

Cost per cattle

(¥)

2 206

1 445

1 375

1 399

1 419

Net income per cattle

(¥)

-496

265

335

311

291

Net income per day

(¥)

-0.46

0.59

0.93

0.97

1.21

Input/output ratio


0.78

1.18

1.24

1.22

1.21

The results show that as the cost of straw increased from zero to ¥ 0.06/kg, a daily intake of 2-3 kg cottonseed cake gave the best economic benefits. When cottonseed cake intake was 2 kg, the best results were achieved in terms of net income per cattle and input/output ratio. However, when cottonseed cake intake was 3 kg, the highest net income per day per cattle was achieved.

The results show that as the price of CSC increased by 50 percent, a daily supplement of 1-2 kg CSC gave the best economic benefits. A daily supplement of 1 kg CSC was the best for net income per cattle and input/output ratio. A daily supplement of 2 kg CSC gave the highest net income per day per cattle. But a daily supplement of 3 kg CSC decreased the net income per day by a large margin.

Case 3: CSC increased from ¥.04/kg to 0.6/kg and straw free

CSC intake

(kg/day)

0

1

2

3

4

Income per cattle

(¥)

1 710

1 710

1 710

1 710

1 710

Cost per cattle

(¥)

1 558

1 276

1 346

1 451

1 572

Net income per cattle

(¥)

152

434

364

259

138

Net income per day

(¥)

0.14

0.96

1.01

0.81

1.45

Input/output ratio


1.10

1.34

1.27

1.18

1.09

Case 4: [email protected] ¥ 0.6/kg and [email protected] ¥ 0.06/kg

CSC intake

(kg/day)

0

1

2

3

4

Income per cattle

(¥)

1 710

1 710

1 710

1 710

1 710

Cost per cattle

(¥)

2 206

1 535

1 519

1 591

1 664

Net income per cattle

(¥)

-496

175

191

119

46

Net income per day

(¥)

-0.46

0.39

0.53

0.37

0.15

Input/output ratio


0.78

1.11

1.13

1.07

1.03

The results show that when the cost of CSC increased from ¥ 0.4 to 0.6/kg and the cost of straw increased from zero to Y 0.06/kg, i.e., all the essential inputs had reached their maximum level, a daily supplement of 2 kg CSC gave better economic benefits. Net income per day, net income per cattle and input/output ratio were all at optimal levels.

Economic analysis of different ammonia sources

The analysis above was based on use of urea, the most extensively used ammonia resource. In practice, in addition to urea, anhydrous ammonia and ammonium bicarbonate are also used. Due to their price differences, the cost of ammoniation is significantly different. On the basis of ammonia source and amount used, it is possible to calculate the cost of ammoniation per source (Table 7-8). Based on the expenses associated with each ammonia source, plus the cost of plastic sheeting and labour, the total cost per kilogram of ammoniated straw can be obtained. Using a similar approach as in the four cases above, it is possible to estimate the economic benefits of using the various ammonia sources.

From Table 7-8, at current prices, urea for straw ammoniation has the highest cost, followed by anhydrous ammonia, and the lowest is ammonium carbonate. As urea is a chemical fertilizer in short supply and extensively used in agricultural production, this greatly influences market prices. Anhydrous ammonia is the raw material for manufacturing urea and ammonium carbonate. Theoretically, it is estimated that 1 t of anhydrous ammonia can manufacture 1.76 t urea or 4.65 t ammonium carbonate, so the cost of ammoniation using anhydrous ammonia should be relatively low.

Table 7-8. Cost of different ammonia sources for ammoniating straw

Ammonia source

Ammonia content (%)

Amount used for ammoniation (%)

Price
(¥/kg)

Ammoniated straw cost (¥/kg)

Urea

46.67

4.5

1.10

0.050

Anhydrous ammonia

82.35

3.0

1.30

0.039

Ammonium bicarbonate

17.72

10.0

0.30

0.030

NOTE. Only the ammonia source is considered, without the cost of facilities (or equipment). In practice, the equipment cost for ammoniation with anhydrous ammonia is fairly high.

Regardless of the ammonia source for ammoniation, the aim is to improve digestibility and palatability of straw, to supplement with non-protein nitrogen, to improve the protein content of straw and, finally, to replace part of the concentrate. Compared with the price of a predetermined concentrate, the ammonia cost that would make straw ammoniation no longer economic has become a concern of decision-makers. This relates to the upper limit of ammonia cost, which can be calculated by a simple formula:

p = a × b × x/y

Where:

p = upper limit of ammonia source cost
a = price of concentrate
b = proportion of ammonia source cost in total cost
x = concentrate saved per unit of ammoniated straw
y = the amount of ammonia used per total DM

A calculation was made using related laboratory data and some published papers. It was assumed that the price of concentrate (a) was ¥ 0.8/kg, and the b value was 0.6. For every kilogram of ammoniated straw, 0.2 kg of concentrate can be saved, therefore x = 0.2. Taking the ammonia use per source from Table 7-8, the upper cost limit of every kilogram of ammonia source can be calculated separately.

purea = 0.8 x 0.6 x 0.2 ÷ 4.5% = ¥ 2.13
panhydrous ammonia = 0.8 x 0.6 x 0.2 ÷ 3% = ¥ 3.2
pammonium bicarbonate = 0.8 x 0.6 x 0.2 ÷ 10% = ¥ 0.96

In the event of exceeding the above upper price limits, from an economic viewpoint it is reasonable to feed more concentrates. In recent years, the price of urea has been below ¥ 1.3/kg. The price of anhydrous ammonia and ammonium bicarbonate are lower than the upper price limits, so the economic benefits are certain.

Case study on the economics of crop residues for ruminants at household level

The economic benefits of cattle production based on straw for rural households is influenced by a series of factors, including level of economic development, scale and technology. A comparative analysis has been made on the overall economic benefits and on those of various scales and different feeding technologies in Fuyang Prefecture. There are no grasslands in Fuyang Prefecture, but it markets more beasts than Inner Mongolia. Mengcheng, Lixin and Woyang counties in Fuyang Prefecture constitute the most concentrated area for cattle in China, and are called the Golden Triangle of cattle.

Introduction to the household survey

A survey was conducted in rural households of Mengcheng, Lixin and Guoyang counties, with the objective of analysing and studying cattle production based on straw. The method adopted was random sampling and house-to-house visits. Township and village selection was based on the economic development level and characteristics of cattle production, while the selection of rural households was at random. The time span was from July 1995 to June 1996. From a total of 120 rural households sampled, data from 119 could be obtained (39 in Mengcheng, 40 in Lixin and 40 in Guoyang). The households selected were typical and representative so that the conclusions from the data would be of general and realistic significance.

Situation of straw utilization and the cost of processing and treatment

Straw processing and utilization are the major components of cattle production based on straw. They not only influence the economics of production by rural household every year, but also determine the potential in future years. The results of the survey showed that the average straw output per rural household was 8 624 kg, and the average purchased straw (mainly wheat straw) per household was 997 kg, for a total of 9 622 kg. Among crop residues of different crops, sweet potato vines ranked first, followed by wheat straw and finally maize stover. Their utilization rate was 38.6, 58.4 and 43.2 percent. From the total, ammoniated straws were 17.4 percent, silage 21.4 and direct feeding 47.4, with an average utilization rate of 86.2 percent and a straw treatment utilization rate of 38.8 percent (Table 7-9).

In 1995, Fuyang Prefecture as a whole had achieved a straw utilization rate for cattle production of 64 percent and a straw treatment rate of 18 percent. Although the value was higher than the national average, the trend was similar to the general trend. Compared with a survey conducted in 1993-1994, both the utilization rate and treatment rate had increased. The total straw utilization rate had increased from 76.4 to 86.2 percent.

Table 7-9. Crop residue utilization by rural households (kg)

Straw type

Total

Output

Bought

Treated

Ensiled

Direct feeding

Feeding rate (%)

Treatment rate (%)

Wheat

3 898

3 008

840

1 599

0

1 797

88.3

58.4

Barley

164

164

0

26

0

100

77.1

15.9

Maize

1 996

1 953

43

0

862

492

67.8

43.2

Rice

230

181

49

51

12

158

96.3

27.5

Soybean

323

323

0

2

0

109

49.9

0.6

Sweet potato

3 062

2 996

66

0

1 187

1 855

99.1

38.6

Total

9 622

8 624

998

1 678

2 056

4 560

86.2

38.8

Ammoniating and ensiling were technologies used widely, accounting for 71.4 and 68.1 percent of households interviewed, respectively. The cost of ammoniating and ensiling was the key factor for adoption. Most rural households used a silage-ammoniating pit for treatment, so this method was used for the cost analysis (Table 7-10). In ammoniation, the cost of straw and of urea, the main expenses, accounted for 49.0 and 31.4 percent of total cost, respectively. For ensiling, the main cost was the crop residue itself, 72.7 percent of the total cost.

Table 7-10. Crop residue processing and treatment costs in rural households

Item

Ammoniation

Ensiling

Quantity of crop residue

500 kg

500 kg

Depreciation

¥ 50

¥ 40

Dosage of 4% urea

¥ 40

-

Depreciation

¥ 32

-

Pit cost

¥ 300

¥ 300

Depreciation

¥ 7.5

¥ 7.5

Plastic film cost

¥ 6.5

¥ 4.5

Labour

1 day

0.5 day

Value of labour

¥ 6

¥ 3

Total cost

¥ 102

¥ 55

Average unit cost

¥ 0.204/kg

¥ 0.110/kg

Overall economics at household level

The average number of cattle per household in Fuyang Prefecture was 3.6, with 2.4 marketed and an income from cattle sales of ¥ 3 190 per household. The average total output value was ¥ 5 217 per household. Households used 609.4 kg of grains with a cost of ¥ 806. The average use of concentrate per household was 648.0 kg, with a cost of ¥ 904. The average input volumes were 3 296 kg for common straw, 2 157 kg for silage, 1 991 kg for ammoniated straw and 2 305 kg for green fodder per household, with a total cost of ¥ 1078 for green fodder and roughage. Average annual net output per household was ¥ 2 172, with a net income of ¥ 1 278 and a net earning rate on costs of 32.4 percent. On average, a net earning of ¥ 360 could be obtained for every head of cattle raised; a net earning of ¥ 8.6 and net output value of ¥ 14.6 could be gained for every working day (Table 8-12).

Mengcheng county started earlier and thus it had fairly large-scale cattle production. The average number of cattle per household was 4.2, while in Lixin and Guoyang it was 3.3 cattle. In addition, the feed input type varied among the three counties. The ratio of concentrates: common straw: silage: ammoniated straw was 698:1 284:1 935:1 243 in Mengcheng; 686:1 491:690:1 822 in Lixin; and 721:2 882:809:253 in Guoyang. The concentrate input in the three counties was fairly close, but there was a large difference in straw input type. Mengcheng County had high silage and high ammoniation levels; Lixin County had low silage and high ammoniation; and Guoyang County had low silage, and low ammoniation. For these reasons, the economic benefits of cattle production based on straw in Mengcheng were higher. The average net outputs for cattle production for Mengcheng, Lixin and Guoyang were ¥ 2 448, 2 084 and 1 988; the net incomes were ¥ 1 567, 1 211 and 1 112; and the net earning rate on costs were 34.6, 32.4 and 31.7 percent, respectively. The average net earnings per cattle raised were ¥ 373, 373 and 337; the average net output values per working day were ¥ 16.7, 14.3 and 13.6; and the average net earnings per working day were ¥ 10.7, 8.3 and 7.6 (Table 7-11).

Economics of different feeding scales at household level

In Fuyang Prefecture, more than 50 percent of the rural households had 2-4 head of cattle. Households with 4-6 head were about one third. Households with 1-2 cattle were rare. The average net output with 1-2 cattle was ¥ 738; with 2-4 head it was ¥ 1 621; with 4-6 head it was ¥ 2 563; and with 6-10 head it was ¥ 5 843. The average net earnings from cattle raising for the four groups were ¥ 258, 800, 1 539 and 4 856, and the average net earning rates on costs were 13.8, 25.4, 31.7 and 64.0 percent, respectively. The average net earnings per cattle raised were ¥ 206, 287, 347 and 620; the average net output values per working day were ¥ 9.2, 11.8, 15.0 and 35.5; and the average net earnings per working day were ¥ 3.2, 5.8, 9.0 and 29.5 (Table 7-12).

Economics of different straw treatment techniques

In Fuyang Prefecture, straw processing and treatment techniques generally accepted by rural households included silage and ammoniation. There were four technical combinations of silage and ammoniation: (1) No ensiling, no ammoniation, use of common straw alone; (2) ammoniation without ensiling, plus common straw; (3) only ensiling, without ammoniation, plus common straw; and (4) both ensiling and ammoniation, plus common straw. From the analysis of the survey, it could be seen that cattle production with common straw was the smallest group, and the economic benefits were the lowest. The larger the scale the better the economic benefits. The group of rural households using two techniques at the same time had a larger scale of operation and better economic benefits. The average net output per household of the four groups - (1) common straw; (2) ammoniation; (3) silage; and (4) silage + ammoniation -were respectively ¥ 1 492, 1 748, 2 140 and 2 362; the average net earnings per household were ¥ 581, 886, 1 222 and 1477; the average net earning rate on costs were 20.5, 26.3, 27.4 and 33.2 percent; the average net earnings per cattle raised were ¥ 187, 281, 344 and 381; the average net output values per working day were ¥ 9.8, 12.2, 14.0 and 16.0; and the average net earnings per working day were ¥ 3.8, 6.2, 8.0 and 10.0, respectively (Table 7 13).

The average concentrate input per cattle of the common straw, ammoniation, silage and silage plus ammoniation groups were 262, 308, 508 and 348 kg, respectively. The proportion of common to ammoniated straw per cattle per household in the ammoniation group was 2 198:1 260, while the proportion of common to silage straw per cattle per household was 2 663:1 383 in the silage group. The proportion using treated straw in the ammoniation and silage groups was about 35 percent for both groups. The reason for the gap in economic benefits in both groups was the large input of cottonseed cake in the silage group (an average of 948 kg per household), significantly higher than the other groups. Thus, the economic benefits were very close to those of the silage plus ammoniation group (Table 7-13).

From the rural household survey and the analysis of the production data, it is clear that the economic benefits of cattle production based on straw are significant, and influenced by various inputs, specially concentrates, ammonia source, straw, etc. The economic benefits will change with changes in prices or the cost of all these essential inputs. In order to obtain the best economic benefits, cattle rearers must constantly adjust their diets and feeding methods to match changes in input costs.

Table 7-11. Overall economic benefits of cattle production based on straw by rural households (Units: head, yuan, 500g, working day)


Average

Mengcheng

Lixin

Guoyang

Number of rural households


39

40

40

Average number of cattle

3.6

4.2

3.3

3.3

Number of cattle marketed

2.4

3.7

2.0

1.6

Income from cattle sales

3 190

4 260

3 119

2 218

Net weight gain

1459

1724

1386

1274

Number of working days per cattle

11.4

10.5

10.4

13.4

Manure output

30 909

34 370

29 307

29 198

Output value of major product

4 639

5 483

4 406

4 051

Output value of sideline products

578

619

535

572

Total output of cattle production

5 217

6 102

4 950

4 623

Amount of feed grain used

1 215

1 562

1 195

896

Cost of feed grain

806

1037

802

585

Amount of other concentrates

1 296

13 659

1 036

1 484

Cost of other concentrates

904

894

802

1 016

Amount of commons traw

6 593

5 393

4 845

5 910

Cost of common straw

297

243

223

428

Amount of silage used

4 314

8 126

2 241

2 670

Cost of silage

237

447

123

147

Amount of ammoniated straw used

3 981

5 219

5 922

835

Cost of ammoniated straw

406

532

604

85

Amount of green grass used

4 611

6 474

2 298

5 108

Cost of green grass

138

194

69

153

Total amount of green and roughage feed

19 499

25 212

15 306

18 123

Total cost of green grass and roughage

1 078

1 416

1 019

813

Depreciation of shed and other assets

95

97

111

77

Medicines, vaccination, breeding

161

210

131

143

Total cost of materials

3 045

3 654

2 865

2 635

Working days

149

147

145

146

Cost of labour

895

881

873

876

Total cost of production

3 940

4 535

3 738

3 111

Net output from cattle production

2 173

2 448

2 084

1 988

Net earning from cattle production

1 278

2 567

1 211

1 112

Net earning rate on costs

32.4

34.6

32.4

31.7

Net earning per cattle

359.9

373.0

372.6

337.1

Net output value per working day

14.6

16.7

14.3

13.6

Net earnings per working day

8.6

10.7

8.3

7.6

Table 7-12. Overall economic benefits of cattle production under different cattle numbers by rural households (Units: cattle, yuan, 500g, working day)

Group (number of cattle/household)

1-2

2-44

4-6

6-10

Number of rural households

6

69

35

9

Average cattle number

1.3

2.8

4.4

7.8

Number of cattle marketed whole period

1.3

1.4

2.6

9.9

Income from cattle sales

1 127

2 014

3 865

10 957

Net weight gain

577

1 093

1 782

3 596

Number of working days per cattle

2.6

11.0

14.0

10.6

Manure output

18 031

23 975

30 339

59 876

Output value of major product

1 834

3 477

5 666

11 434

Output value of sideline products

296

470

730

1 004

Total output of cattle production

2 130

3 947

6 395

12 438

Amount of feed grain used

435

859

1 556

3 176

Cost of feed grain

285

569

1 027

2 117

Amount of other concentrate

673

971

1 809

2 205

Cost of other concentrate feed

442

672

1 284

1 515

Amount of common straw

4 040

6 330

7 211

7 905

Cost of common straw

181.79

284.86

324.47

355.73

Amount of silage used

2 042

2 539

539

15 067

Cost of silage

112

140

299

829

Amount of ammoniated straw used

1 843

2 868

4 681

11 224

Cost of ammoniated straw

188

293

477

1 145

Amount of green grass used

1 830

4 522

4 618

7 120

Cost of green grass

55

136

139

214

Total amount of green and roughage feed

9 755

16 258

21 949

41 316

Total cost of green grass and roughage

537

853

1 240

2 543

Depreciation of shed and other assets

85

95

90

118

Medicines, vaccines, breeding expenses

44

137

191

302

Total cost of materials

1 393

2 326

3 832

6 595

Working days

79

137

171

165

Cost of labour

479

821

1 024

988

Total cost of production

1 872

3 147

4 856

7 583

Net output from cattle production

737

1 621

2 564

5 843

Net earning from cattle production

258

800

1 540

4 855

Net earning rate on costs

13.8

25.4

31.7

64.0

Net earning per cattle

206.2

286.6

346.7

620.0

Net output value per working day

9.2

11.8

15.0

35.5

Net earnings per working day

3.2

5.8

9.0

29.5

Table 7-13. Overall economic benefits of cattle production based on straw under with different feeding techniques by rural households (Units: cattle, yuan, 500 g, working days)

Technical type group

Common straw

Ammoniation

Silage

Silage and ammoniation

Number of rural households

21

17

13

68

Average cattle number

3.1

3.2

3. 6

3.9

Number of cattle marketed

0.7

2.2

2.1

3.0

Income from cattle sales

942

3 045

3 093

3 970

Net weight gain

926

1 158

1 605

1 671

Numbers of working days per cattle

13.1

12.6

12. 1

11.0

Manure output

22 720

29 959

30 227

33 162

Output value of major product

2 944

3 684

5 103

5 313

Output value of sideline products

471

575

574

607

Total output of cattle production

3 415

4 259

6 577

5 921

Amount of feed grain used

697

894

1 210

1 432

Cost of feed grain

453

604

800

952

Amount of other concentrates

929

1 046

2 398

1 268

Cost of other concentrates

634

782

1 640

885

Amount of common straw

9 429

6 923

9 452

4 960

Cost of common straw

424

311

425

223

Amount of silage used

0

0

4 910

6 585

Cost of silage

0

0

270

362

Amount of ammoniated straw used

0

3 969

0

5 975

Cost of ammoniated straw

0

405

0

609

Amount of green grass used

7 698

4 685

3 930

8 475

Cost of green grass

231

141

118

254

Total of green and roughage feed

14 048

15 578

18 292

25 995

Total cost of green grass and roughage

655

857

813

1 449

Depreciation of shed and other assets

64.1

104.1

114.6

99.6

Medicines, vaccines, breeding

116.3

162.8

170.0

173.2

Total cost of materials

1 923

2 511

3 538

3 559

Working days

152

144

153

147

Cost of labour

912

862

917

884

Total cost of production

2 834

3 373

4 455

4 443

Net output from cattle production

1 492

1 748

2 140

2 362

Net earning from cattle production

581

886

1 222

1 477

Net earning rate on costs

20.5

26.3

27.4

33.2

Net earning per cattle

187.4

281.2

344. 4

380.7

Net output value per working day

9.8

12.2

14.0

16.0

Net earnings per working day

3.8

6.2

8.0

10.0


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