Measuring farmers' dynamic technical and udder health management inefficiencies: The case of Wisconsin dairy farms.

This study measures the dynamic technical and udder health management inefficiencies of a sample of Wisconsin dairy farms. Udder health management inefficiency is defined as a farmer's failure to achieve lower levels of milk somatic cell counts compared with those of the best-practice farmers within the sample. The study proposes the treatment of somatic cell count as an undesirable output. We measured inefficiency using a dynamic directional distance function that accounts simultaneously for the expansion of desirable outputs and investments in capital assets, and contraction of undesirable output and variable inputs. In a second step, a bootstrap truncated regression was used to analyze factors that cause differences in dynamic technical and udder health management inefficiencies. Results showed that the sample farmers had considerably higher udder health management inefficiency scores than technical inefficiency scores. The results of the second-stage analysis indicated that technical inefficiency was influenced by summer precipitation and farmers' financial characteristics, and was regionally heterogeneous. Udder health management inefficiency was affected by summer temperature and nonfarm income. By ranking farms in this study in terms of technical and udder health management inefficiency, we allowed inefficient farms to compare their performance with that of their efficient peers, and thus identify targets for production and udder health management improvement efforts. Finally, although our study focused on farmers' performances with respect to udder health management, the proposed modeling framework can be applied to the management of other animal diseases and welfare conditions.