An Economic Analysis of Factors Affecting Pre-Weaned Dairy Calf Growth and Profit Optimization in Dairy Calf Operations

This study was an extension of a study submitted in April 2014 by Sheldon D. Holt entitled “Ambient Temperature, Calf Intakes, and Weight Gains on Preweaned Dairy Calves”. A major component in a profitable dairy operation is the raising of female calves as replacement heifers; but since no direct income is generated by calf raising alone, it is often overlooked as a potential profit area on a dairy farm. Calf management practices that ultimately impact milk productivity and reproductive performance during a heifer’s lifetime begin at birth. This study examines the effect of calf starter intake on calf growth, measuring specifically calf weight. How calf starter intake affected production costs was also examined. Other factors included in the study were seasonal change, hip height, days since birth, and weather conditions. The cost of calf starter is one of the main contributors to total production cost in raising dairy calves. Since the amount of starter intake consumed by the calves in this study was measured by Holt, a cost analysis can be performed using these data. Therefore, the first two objectives of this study are to 1) develop a model which minimizes cost of starter feed (which is a variable controlled by the dairy producer) and 2) use the model developed under objective 1) to find the breakeven point (where the cost of an input is less than or equal to the value gained from that input) and conduct sensitivity analysis with respect to this point. Although an analysis was performed on the data at the close of its collection in 2014 by S.D Holt, there are several econometric issues that were not adequately addressed before these analyses were performed. The following problems have been found in the data: functional form, multicollinearity, heteroskedasticity, and serial correlation. Any interpretation or prediction based on these data, without these issues being resolved, is not reliable. In order for interpretations and predictions based on these data to be valid, the last two objectives of this study are to 3) define in detail the econometric problems that existed in Holt’s study and 4) find and implement solutions to econometric problems that existed in that study