Derivation of economic weights from profit equations

Abstract

The economic weights derived from profit equations depend on the base used for the evaluation. Thus different relative economic weights are obtained per unit of investment, per breeding female, per individual or per unit of product. This has led to uncertainty and confusion about appropriate economic weights in livestock improvement, and to apparent differences in interests between the investor, the farmer and the consumer. It is shown here that if the profit equation has a zero outcome, or the profit equation is transformed by setting its outcome to zero by considering profit as a cost of production (so called ‘normal profit’ in economics), then the relative economic weights are the same for all bases of evaluation. It is argued that this is the appropriate basis to determine economic weights.

Integrating economic parameters into genetic selection for Large White pigs

“…Three methods are available for use in the derivation of economic values, viz., the partial budget approach, partial Economic and genetic parameters for selection differentiation method (Brascamp et al, 1985;Smith et al, 1986) and the bio-economic models (Bourdon, 1998). The partial budget method accounts for marginal returns and marginal costs arising from the improvement, and does not take into account fixed costs.…”

Sustainable Aquaculture: Are We Getting There? Ethical Perspectives on Salmon Farming

“…Knowing that the fish had ''a happy life'' may contribute to the positive experience of a meal. Assuming the goal is profit maximization, economic values for other characteristics and traits such as productivity and growth can be derived using profit functions (e.g., Brascamp et al 1985;Dekkers and Gibson 1998). However, defining breeding goals involving valuation of such intangibles as animal welfare in monetary terms is a challenge and has drawn increasing attention during the last decade (e.g., Torp Donner and Juga 1997;Olesen et al 2000Olesen et al , 2006.…”

Breeding goals for the Kenya Dual Purpose goat. II. Estimation of economic values for production and functional traits

“…Economic values can be derived using either the partial budgeting or the partial differentiation method (Brascamp et al, 1985;Ponzoni, 1986;Smith et al, 1986;Dekkers, 1991;Beckman and van Arendonk, 1993;Visscher et al, 1994). In the partial budgeting method, unit changes in returns (marginal returns) and costs (marginal costs) arising from improvement of a trait are accounted for.…”