Stochastic simulation modeling of the economics of providing additional living space for housed dairy cows

Abstract

The housed environment for dairy cattle is of critical importance to their health, wellbeing, and productivity. Lack of space is an important factor for housing quality assessment due to links with increased likelihood of disease. A recently published randomized controlled trial identified that greater living space provision increased lying time, milk volume production, and also increased time to conception. However, despite probable improvements in cow welfare, the question remains as to whether offering increased living space is a cost-effective option for farmers. The costs associated with financing new housing facilities are escalating, and the industry urgently requires an evidence base for ensuring these investments are financially sustainable. This research used stochastic simulation modeling to explore theoretical net returns on infrastructure investment differences between two living space scenarios (3 m2 vs. 6.5 m2). A cow entered a simulation at the point of first calving, and milk production, reproductive performance, and points of exit were stochastically determined over the cow’s lifetime simultaneously based on living space scenario. This allowed for direct financial comparison over specified sets of parameter inputs. Where cows exited the herd within their second to fourth lactation, the median difference in financial return was observed to be +£87.61 per cow per year (mean + £86.74). The estimated return on investment to provide extra living space access varied dependent on provision method, interest rates, and loan repayment duration. Under the circumstances and contexts investigated, the results suggest that building for increased living space would be cost-effective. When building a new shed with a high living space versus control at a 4.00% interest rate, a median net return on infrastructure investment of +£23.00 per cow per year was identified (range –£25.91 to +£64.16 for 10th to 90th percentile). Since decreased living space is likely to lead to poorer welfare, it can be considered a negative production externality associated with current production systems, the cost of which should also be accounted for when analyzing the economics of housing. Further research is essential to gain a complete understanding of the cost-effectiveness of providing increased living space per cow under different management scenarios.