The Economic Value of Dairy Herd improvement Information in a Sample of Midwestern Dairy Farms

Abstract

The objective of this study was to determine the implicit economic value of DHI information in a sample of dairy farms differing in production management. Although DHI information may contribute to differences in input productivity across farms, the extent of its contribution is influenced by the existing management strategy on the farm. To test the hypothesis, a Cobb-Douglas production function with variable returns to scale was used. Data on management practices, obtained from a survey, were merged with production records from 1985 for 2370 herds on DHI testing. The marginal value productivity per year of DHI per cow was calculated for different management strategies in the sample at a price of $.31/kg of milk. The marginal value productivities were evaluated at the average herd size, average years on DHI, and average milk production for each management strategy. The highest marginal value product of DHI information was associated with a management strategy consisting of feeding buffer, using conventional silo for storage of silage, feeding alfalfa hay, milking in a stanchion barn, having health maintenance program, and using AI. The lowest marginal value product was associated with a management strategy consisting of the same variables but no buffer was fed.