The impact of herd health on the efficiency of dairy farms
Estonian University of Life Sciences, The Institute of Economics and Social Sciences, Fr. R. Kreutzwaldi 1A, EE51006 Tartu, Estonia
*Correspondence: helis.luik@emu.ee
Abstract:
Maximization of profit is one of the main interests of any farmer. Profit depends on managerial decisions and many economic factors, but also on the health of the herd. Thus, it is important to study how different factors related to herd health impact farms’ economic performance. The objective of this paper is to determine how herd health influences farm technical efficiency by comparing Estonian farm data from two periods, the years 2012 and 2017. Typically, the major herd health issues are related to udder problems, followed by reproduction issues and limb disorders. We used the FADN (Farm Accounting Data Network) database and data from Estonian Livestock Performance Recording Ltd. The two-stage mathematical approach was chosen as the research method. In the first stage the DEA (Data Envelopment Analysis) was used to estimate farms’ technical efficiency. The output-oriented VRS (Variable Returns to Scale) approach was applied to the data of 64 farms. In the second stage, we used the FRM (Fractional Regression Model) to define which the technical efficiency drivers were among herd health and economic factors. The study revealed that major changes have occurred between the two periods analysed. The main herd health factors influencing farms’ technical efficiency are the somatic cell count (SCC) and age at first calving.
Key words:
dairy farms technical efficiency, DEA, FRM, herd health