A deterministic bio-economic model that incorporates risk for pasture-based dairy cattle production in the tropics was developed. Two production circumstances were considered: fixed pasture (FP) and fixed herd size (FH). In each circumstance, efficiencies (both economic and biological) and profit were calculated based on milk marketing on volume, and on volume and butter fat content. Additionally, a profit function was used to estimate risk-rated profit(s) where the intensity of the farmer’s aversion to risk was measured using the Arrow-Pratt coefficient (λ). Arrow-Pratt coefficients of 0.0001 and 0.02 were assumed. Feeding cost was the highest followed by marketing, labour, health and reproduction costs, respectively. Under FH, the economic efficiency when milk marketing was based on volume was 3.825 and 4.378 when based on volume and butter fat content. The corresponding economic efficiencies were 3.736 and 4.277 under FP. The biological efficiencies were 0.143 and 0.148 for milk production, and 0.002 and 0.001 for live weight production under FH and FP, respectively. The profits derived when incorporating and when not incorporating risks were different. They also differed when (λ) was 0.02 and 0.0001. The changes in profit after incorporating risk indicate that farmers who were risk averse should be ready to accept lower returns to avoid the unexpected outcomes. This has a direct application in the dairy production systems in the tropics. Dairy cattle production is viable in the tropics for both large- and small-scale farmers. Future production circumstances still need to be considered in the estimation of economic and biological values for the traits of economic importance. Economic and biological values for milk yield (MY), milk butter fat (FY), daily gain (DG), weaning weight (WWT), mature live weight (MLW), calving interval (CI), pre weaning survival rate (PreSR), post-weaning survival rate (PostSR), age at first calving (AFC) and productive life time (PLT) were estimated under FH and FP production circumstances assuming milk marketing based on volume, and volume and butter fat. The economic values for the traits ranged from -17.246 to 100.536, while the biological values ranged between -1.29 to 0.791. Economic values with higher Arrow-Pratt coefficient of absolute risk aversion (λ=0.02) were lower than those reported under λ=0.0001, indicating that the uncertainty of the future market is important and should be considered during the estimation of economic values.
K, W (2021). Bio-economic Modelling To Support Genetic Improvement Of Dairy Cattle In Kenya. Afribary. Retrieved from https://afribary.com/works/bio-economic-modelling-to-support-genetic-improvement-of-dairy-cattle-in-kenya
K, Wahinya "Bio-economic Modelling To Support Genetic Improvement Of Dairy Cattle In Kenya" Afribary. Afribary, 14 May. 2021, https://afribary.com/works/bio-economic-modelling-to-support-genetic-improvement-of-dairy-cattle-in-kenya. Accessed 29 Mar. 2023.
K, Wahinya . "Bio-economic Modelling To Support Genetic Improvement Of Dairy Cattle In Kenya". Afribary, Afribary, 14 May. 2021. Web. 29 Mar. 2023. < https://afribary.com/works/bio-economic-modelling-to-support-genetic-improvement-of-dairy-cattle-in-kenya >.
K, Wahinya . "Bio-economic Modelling To Support Genetic Improvement Of Dairy Cattle In Kenya" Afribary (2021). Accessed March 29, 2023. https://afribary.com/works/bio-economic-modelling-to-support-genetic-improvement-of-dairy-cattle-in-kenya