Specific Objectives of the Project:
The specific objectives of this project are twofold: i) estimate the basis risk (i.e., residual risk remaining after insurance) associated with the U.S. Department of Agriculture (USDA) Risk Management Agency’s (RMA) Pasture, Rangeland, and Forage (PRF) Insurance; and ii) determine the degree to which PRF Insurance mitigates forage-production-related risk for ranchers in California based on varying levels of risk aversion.

Summary of Results:
Agricultural producers who are reliant upon rangelands and pasturelands are some of the most vulnerable to weather-related risk given their dependence on climate-sensitive resources. Index-based insurance products, like the Pasture, Rangeland, and Forage Insurance Program, are considered to be an adaptation strategy for mitigating climatic risks. Given that indices are imperfect predictors of losses, residual (basis) risk persists. This study quantifies basis risk and assesses insurance contract quality for nearly 63 million acres of rangelands in California. Basis risk can be summarized by considering false negative probabilities – the probability that an insured producer suffers a loss without receiving an indemnity payment. On California rangelands the false negative probabilities associated with one (both) of insured time intervals failing to indemnify a loss range from 31% - 46% (14% - 25%). When indemnities were paid, in 36% of the cases the payments are not sufficient to compensate for forage-related losses; the average shortfall in indemnity-related compensation ranged from $1.74/acre to $2.73/acre depending upon the location and underlying value of forage.

Specific Objectives of the Project:
Nonpoint source pollution is the leading cause of water quality impairments in California. Many sources, including cattle grazing in or around streams, lakes, and wetlands, may contribute to the pollution of surface waters. Grazing best management practices (e.g., riparian fencing, off-stream water, etc.) have been shown to reduce fecal-based microbial pollutants and improve surface water quality. Objectives of this project are threefold: i) estimate the biophysical reductions in fecal indicator bacteria over time, ii) estimate the costs associated with grazing best management practices, and iii) compare these costs to biophysical results in the literature on efficacy to estimate benefit/cost of practice implementation.

Project Report/Summary of Results:
Coastal areas support multiple important resource uses including recreation, aquaculture, and agriculture. Unmanaged cattle access to stream corridors in grazed coastal watersheds can contaminate surface waters with fecal-derived microbial pollutants, posing risk to human health via activities such as swimming and shellfish consumption. Improved managerial control of cattle access to streams through implementation of grazing best management practices (BMPs) is a critical step in mitigating waterborne microbial pollution in grazed watersheds. This work reports trend analysis of a 19-year dataset to assess longterm microbial water quality responses resulting from a program to implement 40 grazing BMPs within the Olema Creek Watershed, a primary tributary to Tomales Bay, USA.

Stream corridor grazing BMPs implemented included: 1) Stream corridor fencing to eliminate/control cattle access, 2) hardened stream crossings for cattle movements across stream corridors, and 3) off stream drinking water systems for cattle. We found a statistically significant reduction in fecal coliform concentrations following the initial period of BMP implementation, with overall mean reductions exceeding 95% (1.28 log10)—consistent with 1—2 log10 (90 – 99%) reductions reported in other studies. Our results demonstrate the importance of prioritization of pollutant sources at the watershed scale to target BMP implementation for rapid water quality improvements and return on investment. Our findings support investments in grazing BMP implementation as an important component of policies and strategies to protect public health in grazed coastal watersheds. In total, this suite of practices cost over $870,000 to implement. The remaining work on this project (in progress) uses spatial and temporal variation in practice implementation to determine the benefits and costs associated at the practice level.

Specific Objectives of the Project:
Using transaction-level data from satellite video auctions for cattle in the Western
United States and a hedonic regression framework, price premiums/discounts
were estimated for a variety of value added management and marketing
programs.

Project Report/Summary of Results:
Given that ranchers in the West are at a locational disadvantage, ranchers must
be at vigilant, only adopting production practices that enhance profitability. Based
on the most recent data available from Western Video Market Auction, producers
should be ever cognizant of the basic production and sorting practices that will
bring higher prices on sales day. These include: i) selling steers and heifers in
separate lots to avoid the discount associated with split loads, ii) reducing withinlot
cattle variability whenever feasible, and iii) weaning calves 30 days or more
prior to delivery. In terms of the value-added management and marketing
programs available producers, calves that were age and source verified (ASV)
sold for statistically significant premiums. Lots of yearlings that were implanted,
were raised under the standards of the natural designation (owner or third-party
certified), and those that participated in the Non-Hormone Treated program
earned statistically significant premiums. Both calves and yearlings that were
raised organic or were designated as non-GMO sold for substantial premiums.

Specific Objectives of the Project

Despite increased pressure to employ nonlethal depredation efforts, sheep and lamb operations have little to no information about the benefits or costs associated with implementing one or more of these practices. Conservation biologists and animal rights activists are increasingly concerned with livestock-predator conflicts and maintaining ecosystem diversity. Yet, this comes at a cost to producers whose economic viability is threatened either by losses due to predator or by employing cost-prohibitive nonlethal depredation efforts. This purpose of this project is to quantify both the potential economic benefits associated with nonlethal depredation efforts as well as the costs associated with implementing and maintaining these systems.

Summary of Results

Sheep and lambs in California are particularly susceptible to carnivorous predators, particularly coyotes. Since 1951, the UC ANR Hopland Research and Extension Center (HREC) has been the UC system’s principal sheep research facility, with a flock of more than 500 breeding ewes in 2015. Despite use of “conventional” nonlethal and lethal predator-reduction efforts, mitigating lamb and sheep losses at Hopland has historically been a difficult management challenge. This is also true for thousands of sheep operations throughout the United States. In an attempt to limit deaths due to predators, HREC has adopted an innovative suite of nonlethal predator-prevention strategies including upgraded fencing, mob grazing, frequent pasture rotation, and guardian dogs.

While heuristically these results appear to be very favorable, to date no one has quantified and analyzed the costs associated with the use of these nonlethal predator-prevention efforts. HREC staff have documented their prevention strategies, kept an accounting of the implementation and maintenance costs, and maintained records of sheep and lamb populations and death losses. At present, we have collected and compiled these data and are in the process of using the time variation created by the sequential implementation of the various prevention strategies employed by HREC to identify the incremental benefit associated with each depredation strategy.

In the very near term, we will quantify both the benefits and the costs associated with the use of guardian dogs as a nonlethal predator prevention strategy at HREC. This information will allow ranchers to make informed decisions to improve the economic performance of their operations.

Specific Objectives of the Project:
We sought to investigate spatial, quality, and temporal factors impacting the prices of calves and yearlings in California and other Western states, using data from satellite video auctions and a hedonic regression framework.

Project Report/Summary of Results (this will be posted on the Giannini Foundation website):
Results suggest that spatial price discounts received by Western ranchers, due to the paucity of processing capacity in the West, closely match reported shipping costs and, thus, are consistent with FOB pricing and competitive procurement. Also, this study is the first to identify the presence of temporal price premiums on average for seller-offered forward contracts at video auctions. With respect to quality attributes, this study provides the most up-to-date estimates of the marginal value associated with various quality attributes and management practices, while also finding some support for the benefits of third-party quality certification. Finally, we show that the considerable year-to-year variability in estimated valuations for value-added attributes in hedonic regression models of cattle pricing can be linked to the stage of the cattle cycle as measured by the cattle inventory. This work is updated annually when Western Video Market Auction shares data with the PIs.