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Profit Functions in Dairy Cattle and Effect of Measures of Effeciency and Prices^1,2,3,

US Department of Agriculture, Science and Education Administration, Animal Science Institute, Beltsville, MD 20705

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.

¹ Contribution to the NC-2 Regional Project: Improving Dairy Cattle through Breeding with Special Emphasis on Selection.

² Scientific Article No. A2703, Contribution No. 5748 of the Maryland Agricultural Experiment Station, Dept. of Dairy Science.

³ Work performed cooperating with Animal Science Institute, SEA-AR, USDA, Beltsville Agricultural Research Center.

⁴ Department of Dairy Science, University of Maryland. Permanent Address: College of Animal Science, Haryana Agricultural University, Hissar 12004, India.

⁵ Department of Dairy Science, Virginia Polytechnic Institute and State University, Blacksburg 24061.

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