Virtual Fencing as a Cost-Effective Alternative for New Mexico Ranchers
Agricultural Economics & Community Development
Pilja Vitale
Aztec
Abstract
New Mexico (NM) ranching occurs on large land holdings, with fewer but larger farms. Extensive operations, rising fencing costs, and labor shortages have dramatically increased production costs and limited ranchers' pasture management options, increasing risks of overgrazing and cattle loss. Traditional physical fencing (PF) remains expensive, particularly for interior fencing, which restricts rotational grazing flexibility. Virtual fencing (VF) offers a potentially cost-effective alternative, but its financial viability remains a key concern for producers.
This study evaluates VF’s economic feasibility using enterprise partial budgeting, which compares added costs and reduced revenue of VF against cost savings and additional revenue from replacing PF. The analysis focuses on a 6,000-acre ranch in Southeast NM, where 74% of the state’s beef cattle production occurs on properties over 2,000 acres. A cost estimation model, incorporating partial-budgeting principles, was developed to compare VF and PF based on construction, labor, maintenance, and depreciation costs. PF requires substantial upfront capital investment along with recurring maintenance costs, while VF relies on LoRaWAN towers, e-collars, and batteries, with towers depreciating over 10 years. VF also requires periodic e-collar replacement and software maintenance.
Our findings show VF’s annual cost is only 24% of PF’s, with greater cost savings as fencing distances increase. However, VF adoption decisions extend beyond cost, as producers consider reliability, connectivity, and herd adaptation. Alternatively, VF benefits include enhanced pasture management by enabling rotational grazing without fixed fencing, potentially improving rangeland health and livestock distribution.
To help ranchers assess VF adoption, we developed an interactive online tool that allows producers to compare VF and PF costs and benefits for their specific operations. Using natural language processing (NLP), the tool enables ranchers to ask cost-related questions in plain language (e.g., “How much would VF cost for my ranch?”). The app delivers instant, data-driven responses, integrating partial-budgeting principles to help producers evaluate the financial impact of adopting VF.
This tool provides a decision-support system for ranchers, ensuring they can make informed choices based on economic feasibility and operational needs. While designed for NM, the tool is applicable to other regions facing labor shortages, high fencing costs, and rangeland management challenges.
Authors: Pilja Vitale, Jeffrey Vitale, Michael Patrick, Josha Thomas Campbell
-
Pilja Vitale Extension economist, NMSU, New Mexico, 88003-0000
-
Jeffrey Vitale Associate Professor, Oklahoma State University, Oklahoma, 74074
-
Michael Patrick Extension Specailist, NMSU, New Mexico, 88003-0000
-
Josha Thomas Campbell Extension Specailist, Oklahoma State University, Oklahoma, 74074