Factors affecting economic values for yields of milk components

A dairy herd production model was developed to estimate economic values for changes in herd average genetic levels for milk component yields. The model predicted actual costs and returns of production from herd averages for milk component yields as well as body weight parameters. Economic values were estimated for both profit and economic efficiency objectives. Production system factor effects on relative economic values were examined for breed performance level differences among the five major dairy breeds and alternative herd averages for calving interval, age at first calving, and culling rate. The effects of varying feed and non-feed cost levels as well as three alternative milk markets on relative economic values were also examined. Relative economic values derived for an economic efficiency objective were found to be less sensitive than values derived for a profit objective to changes in all factors. At Holstein production levels, which resulted in near zero profit per cow, relative economic values for profit and economic efficiency were nearly identical.;The importance of the effects of economic and production system factors on economic values for milk component yields was assessed by examining the sensitivity of genetic change from index selection to changes in economic value sets. Differences in market values assigned to milk components were found to be the most important consideration in estimating economic values. Selection response in profit and economic efficiency objectives were reduced by up to 30% when economic values used were developed for the incorrect market. The maximum effect of breed performance level differences was a 9% reduction in selection response for profit. The effects of variation in feed and non-feed costs and herd age variables on economic values resulted in only minor reductions in selection response. Selection responses for economic efficiency objectives were less sensitive than selection responses for profit to alternative economic value sets.;Sire rankings based on economic values derived for both profit and economic efficiency objectives were compared with rankings on current industry indexes. Comparisons showed that only for the fluid milk market is sire ranking much different than a ranking based on equal weighting of fat and protein.