The Impact of Recombinant Bovine Somatotropin on Dairy Farm Profits: A Switching Regression Analysis

Abstract

Profit impact from the use of recombinant bovine somatotropin (rbST) on dairy farms was estimated using switching regression, with separate regressions for rbST-using and rbST-nonusing farms. To correct for potential self-selection bias, a probit adoption function was estimated and used to correct the error term in each regression equation. Farmers who use rbST were found to have more formal education and to have larger dairy herds; age was not a significant determining factor in adoption. RbST was estimated to not increase per-cow profit.