The Effect of Traditional Practices in the Efficiency of Dairy Farms in Wisconsin

The US dairy sector is facing structural changes including a geographical shift in dairy production and a tendency towards the implementation of more intensive production systems. These changes might significantly affect farm efficiency, profitability and the long-term economic sustainability of the dairy sector, especially in more traditional dairy production areas. Consequently, the goal of this study was to examine the impact of practices commonly used by dairy farmers and the effect of intensification on the performance of the farms. We used a sample of 273 Wisconsin dairy farms to estimate a stochastic production frontier simultaneously with a technical inefficiency model. The empirical analysis showed that at a commercial level the administration of bovine somatotropin hormone to lactating cows increases milk production. In addition, we found that production exhibits constant returns to scale and that farm efficiency is positively related to farm intensification, the level of contribution of family labor in the farm activities, the use of a total mixed ration (TMR) feeding system and the milking frequency.