| Summary: | BST is experimentally found that it could increase milk production by 10 percent. This bio-technology may be attractive for dairy farmers to adopt. The objective of this study is to examine some of the potential effects of BST administration on western Canadian dairy farms. The effects include: BST profitability on gross margins of the farm operation; short-run adjustments on milk production levels, herd size, and input combinations for the dairy and cropping enterprises; milk quota values; milk prices; and likely long-term impacts in terms of structural changes in the dairy and related agricultural sectors. Some farms representative of dairy farms in prairie region are classified in the study. A linear programming model is developed to examine BST effects to the representative farms. Two scenarios are assumed regarding BST adoption: milk quota and no milk quota purchase scenarios. Modelling results show that BST is profitable to be adopted on western Canadian dairy farms under either assumed quota scenarios. Both quota scenarios have unique advantages, in terms of gross margins and assets investment of the farms, regarding BST adoption. Input combinations for the dairy and cropping enterprises do change. The respective share of each feed used for rations are changed, although the types of feed remain constant. Cash crops acreage and labour hours hired on the farm are also affected by BST adoption. The respective changes on cash crop acreage and hired labour hours depend on the type of quota scenario assumed. Results also show that milk quota values would increase after BST is introduced to the sector. Conversely, milk prices would be insignificantly affected in the intermediate-term. In the short-run, BST is likely to have some small effects on dairy farm and cow numbers. However, the long-term implications of BST adoption may be more significant. The bio-technology would reinforce the trend of fewer but larger dairy herds in the sector. Furthermore, the impacts of BST adoption on related sectors such as; beef, cropping, and farm inputs are likely to be minor.
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