The effect of lameness prevalence on technical efficiency at the dairy farm level: An adjusted data envelopment analysis approach

A key indicator of resource use within farming is technical efficiency, which measures the amount of physical output attainable from a given set of inputs. The social aspects, in particular the treatment of animals, have generally been ignored within these measurement schemas. In addition, animal welfare will affect the production technology under which farms operate, and some allowance for this is needed within the measurement approach. This is the first paper to apply animal welfare as a discriminating technology within a technical efficiency framework. Using results from an animal welfare monitoring study coupled with resource usage data, it presents an adjusted measure of technical efficiency applied to a sample of British dairy farms and compares differences in lameness management strategies for herds. We employ both a categorical and nondiscretionary variant of the data envelopment analysis approach to measure technical efficiencies and adjust for various degrees of lameness prevalence among these farms. This paper finds that farms with low rates of lameness (below 10% of the cattle herd) tend to have significantly higher technical efficiencies than those with lameness rates of above 10% of the herd. Farms that have levels of lameness of between 10 to 20% of the herd and higher levels of lameness (above 20% of the herd) did not differ significantly. Furthermore, low lameness farms are inefficient in terms of labor and stocking density, but this is outweighed by the gain in milk yield obtained on these farms. Consequently, we argue for a whole-farm, rather than a partial indicator, approach to assessing efficiency when noneconomic factors such as lameness are accounted for. From a policy perspective, we support programs that encourage active lameness management.