Impact of Recombinant Bovine Somatotropin on Dairy Farm Cost of Production: Evidence from Multiyear Data

Abstract

New York dairy farm data over the years 1994-2002 were used to estimate the impact of recombinant bovine somatotropin (rbST) use on the cost of producing a hundredweight of milk. Both fixed and random effects models were estimated. Self-selection bias in the use of rbST was not found to exist. Results imply that the use of rbST on these dairy farms reduces the net cost of producing a hundredweight of milk somewhere between $0.23 and $0.52. For 20,000 pound average per-cow production, this would be a net cost reduction of $46-104 per cow.