Market Valuations of Dairy Bull Characteristics and the Role of Selection Indices

I estimate a hedonic model using the characteristics of over 24,000 dairy bulls sold between 2000 and 2009 to understand how selection indices that estimate the profitability of traits for producers compare to market valuations for those traits. I find that physical traits are valued much higher in the market: physical traits comprise 50% of an equivalent “hedonic index” versus 14% in the USDA’s index and 21% in an index produced by Holstein USA, a breed association. Changes in the USDA’s index are not completely reflected in bull prices, suggesting that changing these indices may have a limited impact on producer choices.