Recipient Organization
TEXAS A&M UNIVERSITY
750 AGRONOMY RD STE 2701
COLLEGE STATION,TX 77843-0001
Performing Department
(N/A)
Non Technical Summary
The overall goal is to evaluate farm financial status to develop tools that help improve resiliency in small and mid-size dairy farms. The project proposes a holistic approach to improve dairy farm resiliency through the following specific aims: 1) Evaluating financial resiliency in small and mid-sized dairy farmers during economic hardships through a dairy business analysis survey and subsequently developing a resiliency index as a benchmarking tool, 2) Evaluating farmers' financial risk for the alternative farm management systems during economic perturbations using multicriteria decision analyses, 3) Developing decision support tool(s) that captures the complex interactions of the techno-economic variables affecting dairy business viability, thereby providing informed investment decisions to small and mid-sized farms. The project will conduct a dairy business analysis of small and med-sized dairy farms in California, Texas, and Wisconsin to investigate the management strategies contributing to resilience during economic hardships, compare and contrast the management decisions contributing to resilience using multi-criteria decision analysis, and finally develop visualizable real-time whole-herd decision-making tools to enable informed financial decisions during economic perturbations. Understanding the factors that motivate farmers to choose among the available alternatives is essential for developing effective solutions that can sustain and support the dairy industry. The shrinking number of licensed dairy herds highlights a concerning trend in the U.S. dairy industry and the financial resiliency attained through the use of these tools will serve as an important aspect in supporting the overall sustainability efforts of the dairy industry.
Animal Health Component
80%
Research Effort Categories
Basic
20%
Applied
80%
Developmental
(N/A)
Goals / Objectives
Our long-term goal isimproving the resilience of small and mid-size dairy farms by providing them with an assessment tool to aid decision-making as they cope with the headwinds of ongoing structural changes in the dairy industry.Objective 1 (RO1) To evaluate financial resiliency in small- and mid-sized dairy farmers during economic hardships. Two steps are proposed to achieve Obj. 1:1a. To understand the management strategies utilized by small and mid-sized dairy farmers to stay operational during economic hardships1b. To develop a resiliency index to rank the current performance of dairy farmsObjective 2 (RO2): To evaluate farmers' financial preference for alternative farm management systems during economic perturbations.Objective 3 (RO3):To develop a comprehensive decision-support tool that captures the complex interactions of the techno-economic variables affecting dairy business resiliency
Project Methods
Objective 1 (RO1) To evaluate financial resiliency in small- and mid-sized dairy farmers during economic hardships.Two steps are proposed to achieve Obj. 1:1a: To understand the management strategies utilized by small and mid-sized dairy farmers to stay operational during economic hardshipsWe will conduct a multi-state survey to capture the attitudes, practices, and strategies that small and mid-sized dairy farmers have adapted to face the challenging economic environment. This will allow us to understand the current technologies (i.e., sensors and automation), feed practices (i.e., feed sources and additives), and overall cost structure of the dairy farms. This survey will give us a first insight into the differences between operations across states and farm sizes.1b To develop a resiliency index to rank the current performance of dairy farmsA subsample of 45 farms will be selected for an in-person interview and a farm visit. These will be our representative farms and will include five types of dairy operations: milking-as-usual, recently adopted robotics, certified organic, transitioned to sell unpasteurized milk, or decided to also grow beef calves. During the interview, we plan to collect farm-level financial and production information and thus conduct a dairy business analysis (DBA) to analyze the financial performance of each dairy enterprise. Then, we will develop the resiliency index using information on farm's output and assets, depreciation, taxes, expenditures, liabilities andvalue of unpaid labor, which will serve as a benchmark to compare across dairies within the five types.Objective 2 (RO2) To evaluate farmers' financial preference for alternative farm management systems during economic perturbations.We aim to understand the decision-making process and the subsequent struggles after transition of dairy farms by using the Multiple Criteria Decision Analysis (MCDA)-a supporting tool for business owners when evaluating the best management option that aligns with their preference and risk tolerance levels. This method will be used to rank management alternatives based on multiple criteria such as cost, labor savings, social values and quality of life. By implementing a robust evaluation system utilizing MCDA, dairy farmers can gain valuable insights into opportunities and challenges of different investment decisions.Objective 3 (RO3). To develop a comprehensive decision-support tool that captures the complex interactions of the techno-economic variables affecting dairy business resiliencyThree steps are proposed to achieve Obj. 3:3a Investigate the relationship between technical, economic and farm management risks using a conceptual dynamic model.A systems approach to map the interplay between farm production, financial, and four management strategies will be employed for our representative simulated farms [46]. A casual loop diagram (CLD) with feedback loops will be used to design hypotheses explaining the farm management and financial behavior observed in Obj. 1-under each management strategies-for three financial performance thresholds (weak, stable, and strong) [47].3b Translate the conceptual model to a quantifiable system dynamics model that allows us to visualize the dynamic interactions in the dairy manager decision-making process.We will further develop our conceptual model to a quantifiable system dynamics model to simulate the farm management decisions under different factor-levels of technical, economic, and perceived risk and opportunity parameters sourced from Obj. 1 & 2. The calibrated and validated model will be used to analyze and visualize the dynamic interactions among financial and technical factors. The model will then be used for policy scenario analyses to understand the potential outcomes of each decision option over time.3c Build a web-based open-access tool to enable dairy farm managers to make farm management transition decisions.The merged data from the DBA, MCDA and the system dynamic simulations will be used for predicting futuristic resiliency index of small and mid-sized dairy farms, using random forest-based machine learning techniques [48]. A web-interface strategic investment analysis tool, based on R Shiny application [49], will be built for the farmer to evaluate the dairy performance. This support tool will allow farmers to visualize their future resiliency indices under various financial and production scenarios. This online interface-including a manual and video tutorial-will be made publicly available and free for download for farmers across the U.S. in a website developed for our project.