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Quantifying Heterogeneous Returns to Genetic Selection: Evidence from Wisconsin Dairies

Author

Listed:
  • Jared P. Hutchins
  • Brent Hueth
  • Guilherme Rosa

Abstract

Estimates of productivity growth in the dairy sector attribute as much as half of observed growth to genetic improvement. Unobserved match quality is an important determinate of genetic selection by dairy farmers that confounds attribution to genetic improvement alone. Using data from a large sample of Wisconsin dairy farms, and national-level data on sire rankings, we develop and estimate a model that accounts for selection behavior, and decompose total productivity change into separate effects for genetic improvement and endogenous selection. We find that selection accounts for as much as 75 percent of the total productivity improvement in our sample. Our results provide evidence for positive assortative matching, whereby farmers who adopt above-average yield genetics also perform better than average for their chosen genetics. Further, we find that management behavior accounts for a significant portion of within-herd cow-level heterogeneity, suggesting that dairy farmers manage their herds at the level of individual cows. Overall, our results indicate that a large portion of productivity growth in dairy farming can be explained by farmers’ ability to identify and select genetics well suited to their production environment.

Suggested Citation

  • Jared P. Hutchins & Brent Hueth & Guilherme Rosa, 2019. "Quantifying Heterogeneous Returns to Genetic Selection: Evidence from Wisconsin Dairies," NBER Working Papers 26417, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:26417
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    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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