The beta analysis technique provides a practical tool for evaluating the business risk associated with feeding supplements to dairy cows. The break-even cost, the expected profitability and the probability of making a profit can all be derived by predicting the marginal milksolids (MS) response, and applying prices for MS and supplements. The range of possible outcomes is simulated from specified maximum and minimum values, and the associated response distribution for each of these variables. The profitability of feeding maize silage on a market milk supply dairy farm was used to demonstrate the possible application of formal risk analysis to dairy herd management with a 50% spring: 50% autumn calving pattern. To be profitable, the marginal response to maize silage has to be maximised when no milk premium is paid, but, in the months when a premium is earnt, the risk of not making a profit is small.
Proceedings of the New Zealand Society of Animal Production, Volume 58, , 125-127, 1998
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