Beef cattle numbers in the People’s Republic of China have expanded dramatically in the past two decades. Most of this enlarged herd is carried as small numbers of animals on smallholder farms whose production focus has traditionally been on cropping, with very limited emphasis on the planting and use of forages and nutritious feed supplements. Limited plantings of specialised forages combined with a poor knowledge of appropriate feeding and husbandry practices for beef cattle by smallholder farmers remains a serious challenge to establishing genuinely sustainable beef enterprises for this sector. Public policy to further raise the level of beef cattle production on smallholder farms is focussing on encouraging the planting and use of new forage species and also on promoting research and extension for improved feeding practices that are centred on these forage species.

The paper presents some results from the economic component of an Australian Centre for International Agricultural Research (ACIAR) project that is exploring options for integrating the planting and feeding of improved forages within existing smallholder farming systems in the Red Soils region of south-central China. An economic model is used to examine these options using a synthetic case example of a smallholder farm enterprise located in Hunan Province. The impact of changing values for several critical profit drivers are reviewed along with the implications of these findings for the management of cattle feeding systems on smallholder farms in the Red Soils region. The model results identify the potential for cattle rearing activities based on producing and feeding improved forages to increase the economic welfare of smallholder households. Where cattle rearing is based on diets of poor quality feedstuffs, economic returns are negative, although positive net cash incomes may support continued commitment of resources to this activity in the short-term.