Optimum Replacement Policies for the Control of Subclinical Mastitis due to S.aureus in Dairy Cows

A dynamic program was used to establish the optimum replacement policy for dairy herds, taking into account subclinical mastitis caused by the bacteria Staphylococcus aureus. This particular pathogen is resistant to normal drug therapies and therefore culling is the major method of control. Methods are described to account for output losses due to yield loss and a reduction in milk price caused by extra somatic cells secreted into the milk by infected cows. Extra culling was justified in both infected and control herds in order to reduce the level of infection in the herd. The method described allows replacement policy to be treated as control expenditure rather than an output loss in the economic analysis of farm animal disease. This approach will become even more important as consumers demand an alternative to the prophylactic use of antibiotics in agriculture without compromising food quality and safety.     

Gains and structural effects of exploiting scale-economies in Norwegian dairy production

In this paper, we present calculations of the economic gains in terms of reduced costs by exploiting scale‐economies in dairy production in Norway, and the effect this would have had on the number of farms. We also explore whether or not optimal scale and unexploited scale‐economies change over time due to scale‐augmenting technical change. The analysis is based on homothetic cost functions estimated by means of data for individual dairy farms for the period 1972–1996. For 1972, we find that, by full exploitation of scale‐economies, the costs could have been reduced by almost 40%, while the number of farms would have been reduced by more than 85%. The number of small farms has been substantially reduced in the period considered. This fact, combined with small scale‐augmenting technical change, implies that the gains and structural effects of exploiting scale‐economies have decreased over time. In 1996, costs could have been reduced by close to 30% by full exploitation of scale‐economies, while the number of farms would have been reduced by slightly more than 70%. Thus, both gains and structural effects are substantially less than in 1972. Nevertheless, the calculated gains for 1996 make almost 5 billion NOK. This corresponds almost exactly to the total public support to the dairy farms in 1996. The unexploited scale‐economies are largely due to the agricultural policy. Thus, a substantial share of the same can be considered as part of the‘price’ the Norwegian society has to pay for this policy. In addition, there are likely to be large hidden costs of this policy due in particular to the quota system and other direct production regulations. They imply that technical innovations and other efficiency‐improving investments requiring increased production to be profitable are not carried out. This is the more likely explanation for the extremely poor efficiency development in Norwegian dairy production in the period studied.     

Household nutrition and income impacts of using dairy technologies in mixed crop–livestock production systems

Technologies like improved breeds of dairy cows and improved forages have the potential to significantly increase dairy cow productivity and farmers’ profits in developing countries. However, adoption of such technologies has been low in Ethiopia, despite numerous efforts to disseminate the technologies in the past. Some studies argue that adoption of technologies is low because welfare effects of the technologies could be insignificant or negative to certain groups of farmers. This article employed propensity score matching and inverse probability weighting estimator with regression adjustment to examine the difference in household nutrition and income between adopters and nonadopters of dairy technologies in rural Ethiopia. We find that adoption of cross‐bred dairy cows and improved forages increases household nutrition and income. The significant household nutrition and income impact for adopters support the notion that many Ethiopian smallholders have not adopted dairy technologies because adopters and nonadopters of dairy technologies have inherent differences in welfare outcome potentials. The results suggest that interventions that enhance access to farm resources and address barriers to input and output value chains could improve adoption of dairy technologies.     

Scale Economies,Technical Efficiency,and the Sources of Total Factor Productivity Growth of Quebec Dairy Farms

Canada's average cost for milk production is among the highest in the world. This paper focuses on specific potential causes by estimating economies of scale and technical efficiency for a panel of Quebec dairy farms that spans the 2001–10 period. Additionally, this paper investigates the sources of total factor productivity growth. The stochastic frontier analysis, based on an input‐distance function, is used to estimate returns to scale relationships across dairy farms. The results show that there is significant economies scale to be exploited and that cost of production could also be reduced by improving technical efficiency. Accordingly, the paper indicates that input‐mix effect is the main source of total factor productivity growth. The results have important implications for Canada's supply management policy, and more specifically for the trading of production quota between dairy farmers, as well as for the delivery of targeted extension services.     

Sources of productivity growth on Finnish dairy farms—application of an input distance function

The objective is to examine sources of productivity change on Finnish dairy farms in the 1990s. The decomposition of productivity change into technical and technical efficiency change is widely recognized but it neglects the scale effect. Generalized decompositions incorporating all three components are calculated for a sample of Finnish dairy farms from 1989-2000. This period is of interest because of the drastic change in agricultural policy when Finland joined the European Union (EU) in 1995. The results indicate that productivity growth was on average low, approximately 0.15% per year. Neutral technical change was identified as the most important source of productivity growth (1.1%). Technical efficiency decreased by almost 0.5% annually. The contribution of the scale effect in productivity change increased towards the end of study period.     

Partial Market Liberalization and the Efficiency of Policy Reform: The Case of the European Dairy Sector

This article analyzes the efficiency of partial market liberalization and policy reform with an application to the European dairy sector. In a second best world, partial moves toward market liberalization are not always efficiency improving. We develop a general equilibrium model to investigate the efficiency implications of discrete changes in government policy. The analysis covers price and quantity instruments used in both domestic and trade policy. We derive simple conditions under which partial market liberalization is efficiency improving. We apply the approach to agricultural policy reform in the European dairy sector and identify market liberalization scenarios that are "not" efficiency improving.     

AN EXAMINATION OF THE TAX SUBSIDIES TO THE DAIRY SECTORS IN CANADA,GERMANY NEW ZEALAND AND THE UNITED STATES

Subsidies to agricultural producers through domestic tax and social programme policies are generally not included in producer subsidy equivalent (PSE) measures. This study examines the price induced distortions of domestic tax policy and social programmes on dairy trade between Canada, New Zealand, Germany, and the United States. The degree of tax subsidisation and the price subsidies needed to offset the tax and social programme advantages enjoyed by each country are estimated using a simulation model. Study findings suggest that current German taxation policy provides a substantial subsidy to dairy producers. Canadian and US farmers also have some trade advantages because of tax policy and social programmes.     

Assessment and improvement of the efficiency of nitrogen use on commercial dairy farms

Nine dairy farmers participated in a project which ran over a four year period from 1997 to 2001, with the aim of improving nitrogen use efficiency (NE) and reducing nitrogen surpluses. Results from systems research and the disadvantages of large nitrogen losses and low NE to the economics of the farm business and the environment were outlined and possible mitigation strategies were discussed with the farmers during visits by a dairy consultant. Initial nitrogen use efficiency (nitrogen output/nitrogen input) ranged from 10% to 23% and nitrogen surplus from 259 to 785 kg N ha¹. During the project nitrogen efficiency improved by an average of 5.4% and nitrogen surpluses reduced by an average of 186 kg N ha¹. The largest changes in nitrogen output per hectare were due to changes in stocking rate rather than changes in milk yield per cow or milk protein content. Nitrogen input was dominated by nitrogen fertilizer input, which for farms applying more than 150 kg N ha¹accounted for between 41% and 85% of total nitrogen input. Reduction in mineral nitrogen fertilizer use was the main way that farmers improved nitrogen efficiency and reduced nitrogen surpluses.     

Determining farm effects attributable to the introduction and use of a dairy management information system in The Netherlands

Yearly production and reproduction data on dairy farms in The Netherlands were obtained to determine whether management information systems significantly improved herd performance variables (management information systems (MIS) effects). The analysis included 357 adopters of a management information system and 357 herds were used as controls. The data comprised years 1987 through 1996, and included for the adopters both the ‘before’ and ‘after’ period. Panel data analysis enabled to estimate MIS effects both within and between farms, allowing for a separation of farm‐specific effects and common (trend) effects. Adoption and use of a management information system resulted in a significant annual increase in rolling herd average milk (carrier) and protein production of 62 and 2.36 kg per cow, respectively. Calving interval was shortened by 5 days. The pay‐back period was approximately 5 years of the system (including the hardware), and therefore, MIS appears to be economically profitable.     

The Dynamics of Agricultural Biotechnology Adoption: Lessons from series rBST Use in Wisconsin, 1994–2001

This article exploits panel data from Wisconsin dairy farmers to examine the dynamics of recombinant bovine somatotropin (rBST) adoption and to identify the characteristics that distinguish among nonadopters, disadopters, and early and late adopters. Panel methods are used to control for omitted variables and endogenous regressors that call into question coefficient estimates derived from cross-section adoption models. The results, however, confirm previous findings that larger farms with complementary feeding technologies are more likely to adopt rBST, nonadopters appear quite unlikely to become adopters, and rBST adoption will remain at rather moderate levels in Wisconsin.     

Social dimensions of market-based instruments: Introduction

This themed issue of Land Use Policy builds on the papers presented at an international symposium entitled Social Dimensions of Market-based Instruments, convened by the Charles Darwin University in Darwin, Australia, in November 2010. The symposium set out to review the extent to which market-based instruments were being employed as social policy tools in various contexts, what challenges achieving relevant social policy objectives posed, what trade-offs arose between environmental, social and economic objectives, and whether and how tensions could be resolved. The contributions to this themed issue provide conceptual-theoretical and empirical takes on the topic. They consider poverty, property rights and equality perspectives of participation and quantify social implications at the program, regional and national levels. They reveal converging messages, e.g. in relation to treatment of poverty, common property rights and nesting across scales. In combination, the papers make a compelling case that social implications of MBIs cannot be ignored and ought to be considered in design and evaluation even if programs do no pursue social objectives, as social dimensions can enhance or affect program effectiveness and efficiency. In doing so, the contributions expand the role that MBIs can play in ensuring sustainable resource use and offer considerations for policy design.     

Quantifying the impact of farmers' social networks on the effectiveness of climate change mitigation policies in agriculture

To reduce agricultural greenhouse gas (GHG) emissions, farmers need to change current farming practices. However, farmers' climate change mitigation behaviour and particularly the role of social and individual characteristics remains poorly understood. Using an agent-based modelling approach, we investigate how knowledge exchange within farmers' social networks affects the adoption of mitigation measures and the effectiveness of a payment per ton of GHG emissions abated. Our simulations are based on census, survey and interview data for 49 Swiss dairy and cattle farms to simulate the effect of social networks on overall GHG reduction and marginal abatement costs. We find that considering social networks increases overall reduction of GHG emissions by 45% at a given payment of 120 Swiss Francs (CHF) per ton of reduced GHG emissions. The per ton payment would have to increase by 380 CHF (i.e., 500 CHF/tCO₂eq) to reach the same overall GHG reduction level without any social network effects. Moreover, marginal abatement costs for emissions are lower when farmers exchange relevant knowledge through social networks. The effectiveness of policy incentives aiming at agricultural climate change mitigation can hence be improved by simultaneously supporting knowledge exchange and opportunities of social learning in farming communities.     

An actor-oriented approach to understanding dairy farming in a liberalised regime: A case study of Ireland’s New Entrants’ Scheme

With the abolition of dairy quotas in 2015 major change in Europe’s dairy industry is anticipated at the level of individual farms, with consequences for how land is utilised and managed. Critical questions in this context are how farmers react to the myriad challenges coming forth from changed policy circumstances and, more specifically, the factors that influence their responses to these challenges at farm level. As part of a broader multi-disciplinary research project, this paper presents a narrative analysis of dairy farmers participating in Ireland’s New Entrants’ Scheme, an initiative that has facilitated the establishment of over two hundred new dairy farms. Salient with an increasing literature on Agriculture Knowledge and Innovation Systems (AKISs) within agriculture, the paper focuses specifically on the actors who influence the decisions of the New Entrants (NEs) at this critical juncture in the transformation of dairy policy. Led by Norman Long’s actor-oriented approach, we examine social interfaces involving NEs and different categories of actors. We found that interfaces conditioned by coercive behaviour on the part of actors had a narrow scope of influence on farmers’ decisions compared to interfaces characterised by relatively equal power relations. The latter interfaces had the capacity to be strongly influential on broad habitual production and management decisions. Interfaces involving family members, however, had ultimate influence on major strategic decision-making, including decisions to establish new enterprises. Overall, our analysis suggests that NEs are empowered decision-makers in their social interfaces with other AKIS actors and our biographical approach to the analysis indicates that quota deregulation itself has not led to radical changes in who influences NEs’ decision-making.     

The links between management's critical success factors and farm level economic performance on dairy farms in Sweden

Management's critical success factors (MCSFs) are used to indicate how farm profits develop, but their usefulness as profitability predictors has previously not been analyzed statistically. This paper explores the usefulness of some commonly used MCSFs in Swedish dairy farms, by investigating whether the MCSFs are significant predictors of economic efficiency. Further, the paper takes a comprehensive view of evaluating farm level efficiency, in that all major input and output efficiency scores are estimated. Previous literature has focused on only one score, or on only one perspective. Our results show that cost efficiency is the more problematic part of the profitability process. Especially the allocative part needs to be improved. Moreover, the results show that the MCSFs milk quality, herd fertility and involuntary culls ratio may not work as indicators of economic performance, whereas milk yield per cow and the mastitis ratio are significant indicators.     

The Consequences of Cobenefits for the Efficient Design of Carbon Sequestration Programs

In this paper, we study the social efficiency of private carbon markets that include trading in agricultural soil carbon sequestration when there are significant cobenefits (positive environmental externalities) associated with the practices that sequester carbon. Likewise, we investigate the efficiency of government run conservation programs that are designed to promote a broad array of environmental attributes (both carbon sequestration and its cobenefits) for the supply of carbon. Finally, policy design and efficiency issues associated with the potential interplay between a private carbon market and a government conservation program are studied. Empirical analyses for an area that represents a significant potential source of carbon sequestration and its associated cobenefits illustrate the magnitude and complexity of these issues in real world policy design.     

Policy and competitiveness of agroforestry-based technologies for maize production in Cameroon: An application of policy analysis matrix

Questions have been raised about the ecological consequences and economic sustainability of exclusive reliance on chemical fertilizers for the rapidly expanding maize production across sub-Saharan Africa. Alternative agroforestry-based natural resource management technologies have been developed for farmers. This paper applies the policy analysis matrix (PAM) to analyze the social profitability of agroforestry-based technologies for maize production in the highland savanna zone of Cameroon, and the impacts of policy shifts on the financial competitiveness of maize production under these technologies. The paper shows that maize production under agroforestry-based systems has high comparative advantage.     

Optimal Design of Agri‐environmental Schemes under Asymmetric Information for Improving Farmland Biodiversity

Information asymmetry is one of the main obstacles to the effective design and implementation of agri‐environmental schemes (AES). The literature has generally addressed this issue through the use of principal‐agent models (PAM). We develop a PAM to support optimal design of a new AES for improving farmland biodiversity. We use the results of choice experiments to assess both the costs incurred by the agent for the provision of biodiversity and the resulting social benefits. We also make a number of novel contributions such as the inclusion of a non‐linear non‐compliance detection curve, a sensitivity analysis to identify which parameter estimates have a critical impact on PAM results, and analysis of the efficiency of different sanction scenarios. The results suggest that: (i) the second‐best solutions differ significantly from the optimal solutions attainable with perfect information, with farmers being strongly over‐compensated for the extra costs associated with improved biodiversity; (ii) monitoring levels should be higher; (iii) the sanction system should be tougher. Sensitivity analysis shows the need for accurate estimates of the marginal cost of public funds and the costs and benefits associated with the public goods, which represent the key parameters determining PAM results.     

Impact of treadle pump irrigation technology on smallholder poverty and food security in Malawi: a case study of Blantyre and Mchinji districts

The Malawi Government has intensified the use of treadle pump irrigation technology in an attempt to increase agricultural production and also to enrich the livelihoods of resource-poor farmers. As a result, the treadle pump is gaining in popularity among smallholder farmers throughout the country. This study was conducted in the districts of Blantyre in the Southern Region and Mchinji in the Central Region of Malawi. A total of 50 treadle pump and 50 non-treadle pump farmers were interviewed in each district to assess the impact of treadle pump irrigation technology with regard to food security and poverty. Gross margin analysis showed that adopters of the technology had higher net farm incomes per hectare (NFIs/ha) than non-adopters per year. In Blantyre, NFI/ha value for adopters was MK122,855 (US$1007) compared with MK15,987 (US$131) for non-adopters under irrigation conditions. Similar results were found in Mchinji with MK51,858 (US$425) and MK16,090 (US$132) for adopters and non-adopters, respectively. Likewise, under rain-fed conditions, adopters had higher NFIs/ha than non-adopters: in Blantyre, the respective NFIs were MK19,497 (US$152) and MK3344 (US$27), whereas in Mchinji the respective values were MK16,896 (US$138) and MK10,084 (US$83). Furthermore, the well-being measurements and analyses of poverty revealed a higher poverty level among non-adopters compared with adopters. The former also had a greater relative risk of falling into deeper poverty than the latter. Transition matrices depicting movement in and out of poverty showed that from 2004 to 2005, some poor adopters moved out of poverty while some non-adopters dropped from being non-poor to poor. No adopter moved from non-poor to poor. From the results, it is concluded that the Government of Malawi should be urged to increase the availability of this kind of technology to the market at a reduced cost by offering tax incentives to local manufacturers and by using an input voucher system to subsidize qualified poor smallholder farmers.     

The Adoption and Impact of Bovine Somatotropin on U.S. Dairy Farms

Data from a national survey representative of U.S. dairy operations were used to assess adoption and the production and financial impacts of recombinant bovine somatotropin (rbST). Adoption rates of rbST varied significantly across the nation, but were higher among larger diary operations in all regions. However, the scale bias of rbST adoption was substantially diminished when the influence of location and the use of related technologies were measured. An increase in milk production per cow was associated with rbST adoption, but estimated financial impacts were not statistically significant due to substantial variation in the net returns of rbST adopters.     

Internal and contextual drivers of dairy restructuring: evidence from French mountainous areas and post‐quota prospects

The end of the milk quota system in Europe has resulted in substantial structural changes to the dairy industry, calling its future into question, especially in mountainous areas. This study analyzes the internal and contextual factors that influence dairy restructuring in French mountainous areas. Three complementary logit models are used to specify farmer decisions (e.g., dairy production exit, stability, and growth). Original and exhaustive geo‐located administrative datasets are combined to create a farm longitudinal dataset and characterize farm‐restructuring patterns on a fine geographical scale. Farm size, corporate legal status, and specialization are positively associated with farm growth. Viable diversification strategies through either farm processing or agro‐environmental scheme contracting are also highlighted. Farm sustainability is supported by the economic success of the local industry and the propensity to adopt extensive practices. With respect to public policy, dairy policy appears to have the strongest impact. Thus, the liberalization of dairy policy threatens the future of dairy farming, particularly in areas with low milk density and no production under labels. This work calls for a policy that promotes the collective dimension of dairy farm performance. The current rural development policy alone may be insufficient to support farms’ long‐term sustainability.