Farm Managers Evaluate Biotechnology

Technological advancements and breakthroughs have occurred regularly in agriculture. Improvements include environmentally controlled confinement livestock facilities, leaner and more efficient animals, improved animal nutrition, better crop production systems, hybrid seeds, and disease control. A mass substitution of machinery for labor has also helped bring U.S. agriculture to its present highly productive status. While biotechnology represents an arena where some dramatic new discoveries are likely, the tools farm managers use to evaluate whether to use a particular new technology will most likely be tools now available such as budgeting, cash-flow analysis, and systems analysis. The bottom line is to determine the greatest economic return.

Impacts on Dairy and Hog Farms

For some, a partial analysis of the operation may be sufficient (see Part III, Chapter 6 on partial budgeting). However, this form of analysis should be used with caution, as many technologies may have impacts beyond the specific enterprise. Managers need to thoroughly examine the interactions on their farms. For example, bovine somatotropin (BST) use in a dairy herd may at first appear to affect only the dairy enterprise. But recommendations on BST include changes in nutrition level and rations with higher energy, so an inventory of cropland and feed handling facilities may be necessary to determine whether existing resources can provide adequate rations. Specific environmental conditions may also be needed.

Porcine somatotropin (PST), like BST, can affect the whole system as well as a particular enterprise. Little is known about the differences in expected production response from PST use in confinement, partial confinement, or pasture swine production systems. Hogs fed PST may be more vulnerable to extreme temperatures, so swine facilities may need to be modified. Moreover, impacts across production systems may not be neutral. PST improves the feed efficiency and average daily weight gain of hogs, producing a leaner product which reaches market weight faster. Thus, the systematic flow of animals through the system may be changed. This has implications for level of facility use: Demands for grow-finish space may lessen while demands for breeding farrowing facilities may increase.

Use of PST may also change the behavior of animals. The hogs eat more often and thus are more active, increasing the chance for aggressive behavior. Also, they spend more time at the feeder. Less aggressive hogs may have more difficulty competing, so increased pen space per hog and increased feeder space may be needed.

Evaluating New Technologies

Farm managers will need to identify probable impacts of the new technology on their farm operations. To do so will require knowledge about the technology, its use, and expected production impacts. Changes that accompany a technological advance can include:

Reduced production costs per unit;

Reduced risk;

Increased production;

New products;

Improved product quality.

Economic evaluation of biotechnological advances can be difficult, and subjective judgments may be necessary where data are not available for the type of operation being evaluated. Furthermore, results under research conditions are typically more favorable than those that can be achieved on the farm. Effective evaluation of technology adoption decisions will involve a number of factors:

Level of production management intensity;

Level of business management ability;

Business financial health;

Availability and quality of resources.

Effective use of many biotechnological products will require improved production management. Some technologies will be complex, requiring a clear understanding of animal biology and all the integrated production relationships. Information on disease population dynamics and epidemiology may also be needed. Intense production management skills will be necessary to effectively integrate all factors such as changes in crop rotations or the need for quality feedstuffs. For example, cows receiving BST have increased nutrient requirements because milk production levels increase. Swine receiving PST have increased protein needs. In both cases, the net effect is that the cost per pound of ration increases. These impacts need to be compared to the value of increased production, keeping in mind that increased quantities of products available will lower the price received. Successful adoption of many technologies will require a strong financial position of the business along with well developed business management skills.

Some technologies will introduce a level of instability into the industry over the adoption and adjustment process. Top level business management skills will be needed to effectively manage this instability. Since effective use of some biotechnologies may require costly remodeling of production facilities, survival will be difficult for those in a weak financial position.

Porcine somatotropin improves the feed efficiency of hogs, producing a leaner product that reaches market weight faster. (USDA Photo by Tim McCabe, ARK-62462)