Efficiency of dairy farms participating and not participating in veterinary herd health management programs

This paper compares farm efficiencies between dairies who were participating in a veterinary herd health management (VHHM) program with dairies not participating in such a program, to determine whether participation has an association with farm efficiency. In 2011, 572 dairy farmers received a questionnaire concerning the participation and execution of a VHHM program on their farms. Data from the questionnaire were combined with farm accountancy data from 2008 through 2012 from farms that used calendar year accounting periods, and were analyzed using Stochastic Frontier Analysis (SFA). Two separate models were specified: model 1 was the basic stochastic frontier model (output: total revenue; input: feed costs, land costs, cattle costs, non-operational costs), without explanatory variables embedded into the efficiency component of the error term. Model 2 was an expansion of model 1 which included explanatory variables (number of FTE; total kg milk delivered; price of concentrate; milk per hectare; cows per FTE; nutritional yield per hectare) inserted into the efficiency component of the joint error term. Both models were estimated with the financial parameters expressed per 100kg fat and protein corrected milk and per cow. Land costs, cattle costs, feed costs and non-operational costs were statistically significant and positive in all models (P<0.01). Frequency distributions of the efficiency scores for the VHHM dairies and the non-VHHM dairies were plotted in a kernel density plot, and differences were tested using the Kolmogorov-Smirnov two-sample test. VHHM dairies had higher total revenue per cow, but not per 100kg milk. For all SFA models, the difference in distribution was not statistically different between VHHM dairies and non-VHHM dairies (P values 0.94, 0.35, 0.95 and 0.89 for the basic and complete model per 100kg fat and protein corrected milk and per cow respectively). Therefore we conclude that with our data farm participation in VHHM is not related to overall farm efficiency.