Defining Economic Efficiency of Beef Production

Gordon Dickerson used to say we’ve spent a tremendous amount of effort trying to determine how fast we could go somewhere, but not much emphasis on which way we should go. 
“I would suspect that same comment would still be valid today,” Montana State University animal scientist Mike Tess told attendees of the opening session of the 34th annual meeting of the Beef Improvement Federation (BIF). The symposium was dedicated to Dickerson’s life work.
Dickerson believed biological objectives should be the basis of most management decisions in production agriculture, Tess said. Dickerson defined biological objectives as “the relative economic importance of the major components of performance in terms of the approximate direct effect of each on cost per unit of production.”
Tess said the fact that these “biological” objectives were based on economic costs and returns rather than just biological inputs and outputs was intuitive.
It’s difficult to separate economic and biological efficiency, but biological inputs are only important if they are associated with an expense, Tess said. “The things that are important are always economic, and the things we measure and choose to select for and change are things that have some economic impact.”
When looking at biological inputs, not all inputs cost the same, and not all outputs are equally valuable, Tess said. “So some measures of economic efficiency that allow these things to be taken into account are important.”
Dickerson believed efficiency (cost per unit of value produced) should be the focus rather than profit. He called profit an “illusory criterion,” contending sales prices tend to fluctuate and profit margins tend to hover near zero in a competitive system. Efficiency, he believed, is a more realistic focus.
For more on this presentation, see the accompanying proceedings paper.
— Shauna Hermel