Examining and assessing stocking rates and their economic impact on a ranch requires the knowledge and understanding of two systems. These systems are range management and production economics. Range management defines the carrying capacity, which is the maximum number of animals one can run without depleting the range resource. Production economics defines the number of animals needed to • maximize net income and net equity. Management considerations and decisions can put pressure on the stocking rate to be above the carrying capacity. The main pressures are risk discount rates and maximized short term financial gains. Unless measured, overgrazing is not seen on a financial statement. Measuring the resource and treating it as a production inventory will offset the inflated gross revenue created by over stocking. Inventory treatment is for internal reporting only.
