Stocking rate and dairy production in New Zealand: An analysis of the UQR model with fixed effects

Abstract

This paper analyzes the effects of stocking rate on dairy production, using New Zealand dairy farm business data for the period 2005-2014. Unlike previous studies that assume a homogenous relationship between stocking rate and dairy production, we contribute to the literature by investigating the heterogeneous effects of stocking rate on milksolids production and applying an unconditional quantile regression model with fixed effects to control for unobserved farm-specific traits that are time invariant. The empirical results show that stocking rate exerts significant heterogeneous effects on milksolids production at different quantiles. In particular, we find that an additional increase in stocking rate (i.e. one cow/ha increase) increases milksolids production per hectare by 0.18%~0.25% but decreases milksolids production per cow by 0.05%~0.12%. In addition, we find that milking interval, dairy breed, farm labour, access to irrigation and farm location are important factors that increase milksolids production