Abstract
Profit equations or functions that reflect the realized profitability of cows have been used in the literature to determine the relative importance of different variables such as milk yield and herd life. In all profit equations, the opportunity cost of postponed replacement, which reflects the profit sacrificed on an average replacement cow by keeping the cow, has been omitted. In this study, three profit equations were compared: total lifetime profit; total lifetime profit accounting for opportunity costs, and profit per day of herd life. Linear regression was used to determine the relative value of first lactation production and herd life on profitability in simulated data. When accounting for opportunity costs, the value of an additional day of herd life was equal to that of a 4.0 kg higher first lactation milk production. The relative value of herd life was overestimated by 260% when opportunity costs of postponed replacement were not accounted for. The need to account for the opportunity cost of postponed replacement in calculating economic weights is clearly demonstrated.
Original language | English |
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Pages (from-to) | 1101-1107 |
Journal | Journal of Dairy Science |
Volume | 74 |
DOIs | |
Publication status | Published - 1991 |
Keywords
- DFI
- Dutch florins
- herd life
- OPCOST
- opportunity costs of postponed replacement
- PPD
- profit equation
- profit per day of herd life
- profitability
- PROFOP
- PRTOT
- total lifetime profit
- total lifetime profit accounting for opportunity costs