Profit Functions in Dairy Cattle and Effect of Measures of Effeciency and Prices

Abstract

This investigation was to define profit functions from cow performance; to establish relationships among profit functions; and to determine effects of prices on characteristics of the functions and on rank of cows. Data were one to three lactations of 182 cows in the Beltsville Holstein herd. Three subsets of the data were used: 1) complete data set (182 cows), 2) cows with an opportunity for three lactations (92 cows), and 3) cows that completed three lactations (47 cows). Four profit functions were computed from income and expense for each cow. The correlation between profit per day and income/expense was .98, while the correlation between profit per day and total profit ranged from .76 to .87 for the two largest data sets. The correlations among profit per day for 1970, 1980, and 1985 price estimates ranged from .98 to 1.00. Correlations among estimates of total profit based on these prices were similarly high. Conclusions are: 1) Defining economic efficiency for dairy cattle as the linear function of income minus expenses per time of herd life is best because the linear function is closely correlated with other functions and is most easily understood. 2) Changes in relative prices had little effect on rank of cows. 3) Income variables milk yield, protein yield, and fat yield had the highest simple correlations with profit per day (>.44). Expense items, feed intake (.27), mastitis treatments (−.21), and herd life (.19) had the highest correlations with this profit function. © 1981, American Dairy Science Association. All rights reserved.