Modelling animal health as a production factor in dairy production : a case of Swedish dairy agriculture

Sammanfattning: Farm animal diseases affect livestock production in several different ways. From an economic perspective, diseases are an undesirable contribution to the production process. Diseases thereby lower the producer's profit margins by reducing animal health and causing unnecessary suffering to the animals. For dairy production, mastitis is the most severe disease and causes both reduced animal health, increased costs, and reduced milk yield. Subclinical mastitis can be recognized by an increase in the somatic cell count (SCC), which is, therefore, often used as an indicator of udder health and milk quality. The purpose of this study was to investigate how animal health affects the production by presenting a general model that can be used to estimate the effect of animal health on production. Modelling animal health as a production factor has not been done in previous studies, which makes the analysis in this thesis unique. A quantitative methodology with a deductive theory approach was applied, and microeconomic theories regarding production and animal health economics formed the theoretical framework. A broad literature review was performed regarding reduced animal health in different livestock production systems, in order to be able to develop generalized knowledge regarding how animal health affects production. The study is based on secondary data from Växa Sverige and consisted of both biological- and economic outcomes from 99 dairy farms. Data were analyzed in SPSS and STATA by multiple regression analysis where both a Cobb-Douglas production function and a translog production function were used. On the basis of the results of this study, it can be concluded that animal health has a statistically significant effect on production. Through the results, Swedish dairy producers can estimate whether investments in improved animal health are worth the cost that is added. The developed model can also be generalized and used for other livestock production systems to investigate how animal health affects production