| A theoretical framework of the economics of genetic change in livestock is developed based on long run production economics theory. Within this framework, an optimal production plan can be derived for a farm both before and after the genetic change takes place. Conventional methods of evaluating genetic change consider either the change in the difference between (linear profit) or the ratio of (cost reducing) the dollar value of inputs and the dollar value of outputs. The farm production plan is determined arbitrarily and is usually unchanged after genetic improvement. When compared with a production economics model based on a Cobb Douglas type production function, the linear profit method only differs from the proposed method when genetic changes are large, such as those expected from a breed change or the effects of a major gene. However, differences between the cost reducing method and the proposed method can be large, even with the small trait changes expected from conventional breeding programs.; As an example of the proposed method, a bioeconomic feedlot model is developed for the comparison of beef cattle genotypes under commercial Canadian feedlot conditions. Comparisons between genotypes are made based on the expected purchase price premium paid for a breed, breed cross or animal when it is slaughtered at its profit maximising slaughter end point. Charolais, Simmental, Limousin, Hereford and Angus breeds and their crosses are compared using trait estimates derived from four major breed comparison experiments in North America. Economic weights are also calculated for the traits of these breeds and their crosses. Rankings of breeds and the economic weight for fat depth at a constant live weight are shown to change when animals are slaughtered at arbitrarily determined age, weight or fat constant slaughter end points as opposed to at their profit maximising end point (i.e. optimum). Breed rankings and economic weights for daily gain, daily feed intake and dressing percent were relatively insensitive to other model assumptions. It is concluded that production economics theory has considerable value for economic decision making in animal breeding. |
