Abstract
Health and reproductive conditions affect milk yields in dairy cows and may lead to differences in technical efficiency across farms. To investigate this, we created a novel panel data set of 197 dairy farms in northern Spain observed over the period 2006-2014 by combining information from 2 different sources and including data on production variables, somatic cell count, and reproduction indicators, as well as a genetic index. We used these data to estimate a stochastic production frontier where the somatic cell count, age at first calving, and calving interval are included as determinants of technical efficiency. Higher somatic cell count, greater age at first calving, and longer calving intervals were found to decrease technical efficiency, translating into significant losses in profits which we quantify through a simulation exercise. We also quantified the effect of genetic selection on profits, taking into account not only its direct effect on productivity but also its indirect effect through reduced technical efficiency due to the effect of genetic selection on the health and reproduction variables.
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