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Stochastic economic analysis of dairy cattle artificial insemination reproductive management programs

Department of Agricultural, Food, and Resource Economics, Michigan State University, East Lansing 48824

¹ Corresponding author: olynknic{at}msu.edu

Dairy herd reproductive performance and efficiency are closely tied to whole-farm profitability on commercial US dairy operations. Decision support assists farm managers seeking to determine economically optimal programs. Stochastic dominance is a risk efficiency criterion that was used to determine the preferred set of reproductive management programs. Stochastic dominance analysis of reproductive management programs, including visual heat detection without aids, Ovsynch, and Cosynch, was undertaken to facilitate management decisions regarding reproductive management programs. First-degree stochastic dominance identified the efficient set of reproductive management programs for those decision makers who simply prefer "more to less" or in this case prefer the higher value program. Second-degree stochastic dominance was used to identify the efficient set for decision makers who prefer "more to less" at a diminishing rate, reflecting risk aversion. For each program, artificial insemination submission rate and conception rate were the outcome variables that involved risk. Ovsynch and Cosynch were found to be first- and second-degree dominant over visual heat detection in the example base case. Comparing Ovsynch and Cosynch revealed first- and second-degree stochastic dominance of Ovsynch over Cosynch. Managers with all risk preferences would prefer Ovsynch until an additional 9 min of labor were required for Ovsynch. Risk-averse managers would prefer Ovsynch to Cosynch until an additional 25 min of labor were required to breed with Ovsynch. This highlights that, in the example base case, risk-averse managers are willing to incur additional labor costs to breed with Ovsynch and avoid potential downside conception rate risks associated with Cosynch. Risk preferences of the manager affect which programs remain in the efficient set. Risk preferences of farm managers must be recognized when making reproductive program recommendations. Because dairy farmers are likely to be risk averse, second-degree stochastic dominance is particularly important for their decisions.

Key Words: stochastic dominance • reproductive management • decision support