On the derivation of economic weights in livestock improvement

Abstract

The use of profit equations for deriving economic weights (the value per unit improvement in a trait) in the genetic improvement of livestock has led to anomalies both in theory and in practice. These anomalies can be removed by imposing two conditions. One is that any extra profit from genetic change that can be matched by rescaling the size of the production enterprise should not be counted since it can be achieved without any genetic change. Only savings in cost per unit of product value should be included. The second condition is that changes that correct previous inefficiency in the production enterprise should not be counted. Thus, it is assumed that resources are efficiently used, and changes in output will require proportional changes in input. This means that fixed costs, like variable costs, should be expressed per unit of output, rather than as a fixed total enterprise cost. Improvement effort spent on traits that redress current inefficiencies in a production enterprise is of local and temporary value and is at the opportunity cost of improvement of other traits that save costs per unit of product value and are of permanent and general value. Application of these two conditions is shown to give economic weights that are identical on different bases; scaled output value, input or profit; fixed output value, input or profit; and zero profit. They were also equivalent to economic weights derived as the cost per unit product value from an economic efficiency index. The dilemma of different economic weights for different perspectives in production (unit of product, animal, producer, investor, and consumer) is also resolved.

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.…”

“…These benefits should not be accounted for when estimating economic values (Smith et al, 1986). In this study, management was assumed to be optimum and hence the economic values obtained fulfil the requirements of Smith et al (1986).…”

“…These benefits should not be accounted for when estimating economic values (Smith et al, 1986). In this study, management was assumed to be optimum and hence the economic values obtained fulfil the requirements of Smith et al (1986). Population means might also change as a result of genetic selection, which might cause changes in optimum management (Amer and Fox, 1992).…”

Economic weights of fertility, prolificacy, milk yield and longevity in dairy sheep

“…Two different procedures were used to define the economic weights. The first is a linear function, whereas the second applies a rescaling procedure (Smith et al, 1986).…”

“…However, problems related to the perspective have long been discussed, because different perspectives lead to different economic weights and paradoxes related to the size of the enterprise (Smith et al, 1986;Amer and Fox, 1992;Goddard, 1998). To solve this point, a commonly accepted approach is that of 'rescaling' (Smith et al, 1986;Visscher et al, 1994). All perspectives and methodologies are equivalent when profit is zero: it is also expected that, in a competitive market, enterprise profit is expected to be zero or close to zero.…”