Benchmarking Cost of Milk Production in 46 Countries
DOI:
https://doi.org/10.6000/1929-7092.2014.03.20Keywords:
Benchmark, cost of milk production, International Farm Comparison Network, typical farmAbstract
The global dairy industry is facing challenges due to the extremely volatile milk price and a substantial increase of feed prices. The goal of this study, therefore, was to compare and benchmark the cost of milk production in 46 countries representing 87% of the world's total milk production, using a standard method developed by the International Farm Comparison Network (IFCN). Two typical farms were selected per country; one average-sized and one larger farm. The cost of milk production in 2010 ranged from 16.91US-$/100kg Energy Corrected Milk (ECM) in Armenia to 97.27 US-$/100kg ECM in Switzerland, with cost differences mainly driven by the diversity in farming and feeding systems. Based on costs, world regions were categorized into four levels: 40-50 US-$ in the EU, Middle East and China; 30-40 US-$ in the USA, Brazil, CEEC and Oceania; <30 US-$ in Africa, Asia, South America; >60 US-$ in Austria, Norway, Switzerland and Canada. The major drivers for this variation were ranked as; purchased feed cost (the highest) followed by labor, land and machinery costs. Regression analyzes showed that costs were highly correlated milk yield and milk price but not to herd size.References
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http://dx.doi.org/10.3168/jds.2008-1123
Barker, D., Hallberg, M.C., Tanjuakio, R., Eletrich, J., Beck, R.L. and Liebrand, C.B.1990. Estimates of costs of producing milk in seven major milk producing countries 1986. USDA, ERS, Washington.
Brag, L.A. and T. J. Dalton. 2004. Factors Affecting the Decision to Exit Dairy Farming: A Two-Stage Regression Analysis. J. Dairy Sci. 87: 3092-3098.
http://dx.doi.org/10.3168/jds.S0022-0302(04)73444-X
Breustedt, G. and T. Glauben.2007. Driving forces behind exiting from farming in Western Europe. J. Agri. Econ.58(1): 115-127.
http://dx.doi.org/10.1111/j.1477-9552.2007.00082.x
Brierley, Cowton, Drury.2001. How production costs are calculated and used in decision making: a pilot study, Managerial Auditing Journal 16/4, 2001, MCB University Press, pp. 202-206.
Butault, J.-P., Moreau, R., Roussellle, J.-M. 1995. La vaiabilite des couts de production dans six pays del’Europe du nord: Allemagne, France, Pays-Bas, Danemark, Royaume-Uni et Irlande. Cahiers de L’onilait, 14, 48-60.
Custer, R. L., Scarcella, J. A., Stewart, B. R., 1999. The modified Delphi Technique – A rotational modification. Journal of vocational and technical education 15(2).
Deblitz, C. 1993. International Vergleich von Systemen extensiver zielgebundener Gründlandnutzung-produktionstechnische und ökonomische analyze der Wettbewerbsfähigkeit, internationale Übertagbarkeit. Mellen University Press, New York.
FACEPA (Farm Accountancy Cost Estimation and Policy Analysis of European Agriculture). 2008. Cost of production: Definition and Concept, FACEPA Deliverable D1.1. 2 – October 2008, INEA – Italy. Available at: http://www.rica.inea.it/public/it/ view_file.php?action=article&id=127&ext=pdf&data_type=application/pdf. accessed at April 2012.
Fingleton, W. A.1995. Comparative costs and returns for milk production in European countries. Annual conference of the Agricultural Society of Ireland, Dublin.
French, B. 1992. The analysis of productive efficiency in agricultural marketing: models, methods and progress, in a survey of Agricultural Economics Literature volume I, Traditional Fields of Agricultural economics, 1940s to 1970s, Ed. Lee R. Martin, 1992.
Gonzales-Gomez, J.I. and Morini, S.2009.A model for cost calculation and management in a multiproduct agricultural framework. The case for ornamental plants. Spanish Journal of Agricultural Research 2009 7(1), 12-23.
http://dx.doi.org/10.5424/sjar/2009071-394
Hagemann, M., Hemme, T., Ndambi, O.A., Alqaisi, O. and Sultana, M.N. 2011.Bechmarking of greenhouse gas emission of bovine milk production systems for 38 countries. Animal Feed Science and Technology. vol. 166, pages 46-58.
http://dx.doi.org/10.1016/j.anifeedsci.2011.04.002
Hagemann, M., Ndambi, A., Hemme, T. and Latacz-Lohmann, U. 2012.Contribution of milk production to global greenhouse gas emission: an estimation based on typical farms. Environ SciPollut Res Int.
http://dx.doi.org/10.1007/s11356-011-0571-8
Hemme, T., O.A. Alqaisi, O.A. Ndambi, and D. Boelling. 2014. IFCN contribution to the IDF/FAO/IFCN joint project, World Mapping of Animal Feeding Systems in the Dairy Sector. International Dairy Federation (In press).
Hemme, et al., 2011. IFCN Dairy Report 2011.International Farm Comparison Network, IFCN Dairy Research Center, Kiel, Germany.
Hemme, et al., 2012. IFCN Dairy Report 2012.International Farm Comparison Network, IFCN Dairy Research Center, Kiel, Germany.
Hemme, et al., 2013. IFCN Dairy Report 2013.International Farm Comparison Network, IFCN Dairy Research Center, Kiel, Germany.
Hemme, T., 2000. Ein Konzept zur international vergleichenden Analyze von-Politik-und Technikfolgen in der Landwirstschaft. Land bauforschung Völkernode, Sonderheft, 215 (2000).
Hemme, T., Garcia, O., Khan, A. R., 2004. A Review of Milk Production in Bangladesh with particular Emphasis on small-scale producers. FAO-Pro-Poor Livestock Policy Initiatives working paper No. 7. http://www.fao.org/ag/againfo/ programmes/en/pplpi/docarc/execsumm_wp07.pdf
Holzner, J., 2004. Eine Analyze der Internationalen Wetwewerbsfähigkeit der Milcherzeugung an ausgewäahlten Standorten in Ostdeutschland, der Tschechischen Republik und Estland. Landbauforschung Völkennorde-Forshungsanstalt für Landwirtschaft Braunschweig 282.
Hutjens, M.F., 2005. Dairy efficiencyand dry matter intake. Proceedings of the 7th Western Dairy Management Conference _ March 9-11, 2005- Reno, NV- 71, available at: http://www.wdmc.org/2005/8Hutjens.pdf, accessed date: December 2012
International Farm Comparison Network (IFCN), 2012. IFCN Dairy Report 2012, Schauenburger Str. 116, 24116 Kiel, Germany. www.ifcndair.org
Isermeyer, F. 1989. Die Wettberbsstellung der deutschen Landwirtschaft in der Milchproducktion, Göttingen.
Isermeyer, F., 1998. Produktionsstrukturen, Produktionskosten und Wettbewerbesstellung der Milchproduktion in Nordamerika, Neuseeland und der EG. Wissenschaftsverlag Vauk, Kiel.
Isermeyer, F., Hemme, T. and Holzner, J. 2003.Analysis of international competitiveness of milk production in the framework of the IFCN. Agricultural Economics-Czech 49(2):94-100.
Isermeyer, 2012. Production cost calculations and methodologies used for Dairy, Beef, Pork and Poultry Industries. In: Langrell, S, Ciaian, P and Paloma, S, G. Y (Editors). Production Costs in the Global Farming Sector: Comparative Analysis and Methodologies. JRC Scientific and policy report-EUR 25436 EN.
Knutson, R.D., Roman, R., Anderson, D.P., Richardson, J.W. 1997. Farm Level consequences of Canadian and US Dairy policies. AFPC working paper 97-8; Agricultural and Food Policy Center, Department of Agricultural Economics, Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University.
Koonawootrittriron, S., Elz, M. A., Yeamkong, S. and Suwanasopee, T. 2012. A comparative study on dairy production and revenue of the dairy farms supported by a dairy cooperative with those supported by a private organization in Central Thailand. Livestock Research for Rural Development. Volume 24, Article #61. Retrieved May 1, 2012, from http://www.lrrd.org/lrrd24/4/koon24061.htm
Miller, J.W. 1997. Assessing the Farm-Level Competitiveness of milk production in Mexico and the United States.Dissertation, Texas A&M University, Texas.
Ndambi, O. A., Garcia, O., Balikowa, D., Kiconco, D., Hemme, T., Latacz-Lohmann, U., 2008. Milk production systems in Central Uganda: a farm economic analysis. Tropical Animal Health and Production 40, 269-279.
http://dx.doi.org/10.1007/s11250-007-9091-4
Ndambi, O. A., Hemme, T., 2009. An economic comparison of typical dairy farming systems in South Africa, Morocco, Uganda and Cameroon. Tropical Animal Health and Production 41, 979-994.
http://dx.doi.org/10.1007/s11250-008-9288-1
Richardson, J.W. 1998. Simulation: A tool for decision making. Department of Agricultural Economics, Texas A&M University, Education paper for simulation class.
Thorne, F.S., 2004. Measuring the competitiveness of Irish Agriculture (1996-2000). The rural economy research center working paper series, Working paper 04-WP-RE-02. http://www.teagasc.ie/research/reports/ruraldevelopment/5065/eopr-5065.pdf
Uddin, M. M., Sultana, M. N., Ndambi, O. A., Hemme, T., Peters, K. J., 2010. A farm economic analysis in different dairy production systems in Bangladesh. Livestock Research for Rural Development. Volume 22, Article # 122. Available at: http://www.lrrd.org/lrrd22/7/uddi22122.htm
Uddin, M.M., Sultana, M.N., Brümmer, B and Peters, K.J. 2012. Assessing the impact of dairy policies on farm-level profits in dairy farms in Bangladesh: Benchmarking for rural livelihoods improvement policy. Journal of Reviews on Global Economics, 1, 124-138.
vanCalker, K.J., Berentsen, P.B.M., Giesen, G.W.J., Huirne, R.B.M., 2005. Identifying and ranking attributes that determine sustainability in Dutch dairy farming. Agriculture and Human Values 22, 53-63.
http://dx.doi.org/10.1007/s10460-004-7230-3
Alvarez, A., del Corral, J., Solis, D., Perez, J.A., 2008. Does Intensification Improve the Economic Efficiency of Dairy Farms? J. Dairy Sci. 91, 3693-3698.
http://dx.doi.org/10.3168/jds.2008-1123
Barker, D., Hallberg, M.C., Tanjuakio, R., Eletrich, J., Beck, R.L. and Liebrand, C.B.1990. Estimates of costs of producing milk in seven major milk producing countries 1986. USDA, ERS, Washington.
Brag, L.A. and T. J. Dalton. 2004. Factors Affecting the Decision to Exit Dairy Farming: A Two-Stage Regression Analysis. J. Dairy Sci. 87: 3092-3098.
http://dx.doi.org/10.3168/jds.S0022-0302(04)73444-X
Breustedt, G. and T. Glauben.2007. Driving forces behind exiting from farming in Western Europe. J. Agri. Econ.58(1): 115-127.
http://dx.doi.org/10.1111/j.1477-9552.2007.00082.x
Brierley, Cowton, Drury.2001. How production costs are calculated and used in decision making: a pilot study, Managerial Auditing Journal 16/4, 2001, MCB University Press, pp. 202-206.
Butault, J.-P., Moreau, R., Roussellle, J.-M. 1995. La vaiabilite des couts de production dans six pays del’Europe du nord: Allemagne, France, Pays-Bas, Danemark, Royaume-Uni et Irlande. Cahiers de L’onilait, 14, 48-60.
Custer, R. L., Scarcella, J. A., Stewart, B. R., 1999. The modified Delphi Technique – A rotational modification. Journal of vocational and technical education 15(2).
Deblitz, C. 1993. International Vergleich von Systemen extensiver zielgebundener Gründlandnutzung-produktionstechnische und ökonomische analyze der Wettbewerbsfähigkeit, internationale Übertagbarkeit. Mellen University Press, New York.
FACEPA (Farm Accountancy Cost Estimation and Policy Analysis of European Agriculture). 2008. Cost of production: Definition and Concept, FACEPA Deliverable D1.1. 2 – October 2008, INEA – Italy. Available at: http://www.rica.inea.it/public/it/ view_file.php?action=article&id=127&ext=pdf&data_type=application/pdf. accessed at April 2012.
Fingleton, W. A.1995. Comparative costs and returns for milk production in European countries. Annual conference of the Agricultural Society of Ireland, Dublin.
French, B. 1992. The analysis of productive efficiency in agricultural marketing: models, methods and progress, in a survey of Agricultural Economics Literature volume I, Traditional Fields of Agricultural economics, 1940s to 1970s, Ed. Lee R. Martin, 1992.
Gonzales-Gomez, J.I. and Morini, S.2009.A model for cost calculation and management in a multiproduct agricultural framework. The case for ornamental plants. Spanish Journal of Agricultural Research 2009 7(1), 12-23.
http://dx.doi.org/10.5424/sjar/2009071-394
Hagemann, M., Hemme, T., Ndambi, O.A., Alqaisi, O. and Sultana, M.N. 2011.Bechmarking of greenhouse gas emission of bovine milk production systems for 38 countries. Animal Feed Science and Technology. vol. 166, pages 46-58.
http://dx.doi.org/10.1016/j.anifeedsci.2011.04.002
Hagemann, M., Ndambi, A., Hemme, T. and Latacz-Lohmann, U. 2012.Contribution of milk production to global greenhouse gas emission: an estimation based on typical farms. Environ SciPollut Res Int.
http://dx.doi.org/10.1007/s11356-011-0571-8
Hemme, T., O.A. Alqaisi, O.A. Ndambi, and D. Boelling. 2014. IFCN contribution to the IDF/FAO/IFCN joint project, World Mapping of Animal Feeding Systems in the Dairy Sector. International Dairy Federation (In press).
Hemme, et al., 2011. IFCN Dairy Report 2011.International Farm Comparison Network, IFCN Dairy Research Center, Kiel, Germany.
Hemme, et al., 2012. IFCN Dairy Report 2012.International Farm Comparison Network, IFCN Dairy Research Center, Kiel, Germany.
Hemme, et al., 2013. IFCN Dairy Report 2013.International Farm Comparison Network, IFCN Dairy Research Center, Kiel, Germany.
Hemme, T., 2000. Ein Konzept zur international vergleichenden Analyze von-Politik-und Technikfolgen in der Landwirstschaft. Land bauforschung Völkernode, Sonderheft, 215 (2000).
Hemme, T., Garcia, O., Khan, A. R., 2004. A Review of Milk Production in Bangladesh with particular Emphasis on small-scale producers. FAO-Pro-Poor Livestock Policy Initiatives working paper No. 7. http://www.fao.org/ag/againfo/ programmes/en/pplpi/docarc/execsumm_wp07.pdf
Holzner, J., 2004. Eine Analyze der Internationalen Wetwewerbsfähigkeit der Milcherzeugung an ausgewäahlten Standorten in Ostdeutschland, der Tschechischen Republik und Estland. Landbauforschung Völkennorde-Forshungsanstalt für Landwirtschaft Braunschweig 282.
Hutjens, M.F., 2005. Dairy efficiencyand dry matter intake. Proceedings of the 7th Western Dairy Management Conference _ March 9-11, 2005- Reno, NV- 71, available at: http://www.wdmc.org/2005/8Hutjens.pdf, accessed date: December 2012
International Farm Comparison Network (IFCN), 2012. IFCN Dairy Report 2012, Schauenburger Str. 116, 24116 Kiel, Germany. www.ifcndair.org
Isermeyer, F. 1989. Die Wettberbsstellung der deutschen Landwirtschaft in der Milchproducktion, Göttingen.
Isermeyer, F., 1998. Produktionsstrukturen, Produktionskosten und Wettbewerbesstellung der Milchproduktion in Nordamerika, Neuseeland und der EG. Wissenschaftsverlag Vauk, Kiel.
Isermeyer, F., Hemme, T. and Holzner, J. 2003.Analysis of international competitiveness of milk production in the framework of the IFCN. Agricultural Economics-Czech 49(2):94-100.
Isermeyer, 2012. Production cost calculations and methodologies used for Dairy, Beef, Pork and Poultry Industries. In: Langrell, S, Ciaian, P and Paloma, S, G. Y (Editors). Production Costs in the Global Farming Sector: Comparative Analysis and Methodologies. JRC Scientific and policy report-EUR 25436 EN.
Knutson, R.D., Roman, R., Anderson, D.P., Richardson, J.W. 1997. Farm Level consequences of Canadian and US Dairy policies. AFPC working paper 97-8; Agricultural and Food Policy Center, Department of Agricultural Economics, Texas Agricultural Experiment Station, Texas Agricultural Extension Service, Texas A&M University.
Koonawootrittriron, S., Elz, M. A., Yeamkong, S. and Suwanasopee, T. 2012. A comparative study on dairy production and revenue of the dairy farms supported by a dairy cooperative with those supported by a private organization in Central Thailand. Livestock Research for Rural Development. Volume 24, Article #61. Retrieved May 1, 2012, from http://www.lrrd.org/lrrd24/4/koon24061.htm
Miller, J.W. 1997. Assessing the Farm-Level Competitiveness of milk production in Mexico and the United States.Dissertation, Texas A&M University, Texas.
Ndambi, O. A., Garcia, O., Balikowa, D., Kiconco, D., Hemme, T., Latacz-Lohmann, U., 2008. Milk production systems in Central Uganda: a farm economic analysis. Tropical Animal Health and Production 40, 269-279.
http://dx.doi.org/10.1007/s11250-007-9091-4
Ndambi, O. A., Hemme, T., 2009. An economic comparison of typical dairy farming systems in South Africa, Morocco, Uganda and Cameroon. Tropical Animal Health and Production 41, 979-994.
http://dx.doi.org/10.1007/s11250-008-9288-1
Richardson, J.W. 1998. Simulation: A tool for decision making. Department of Agricultural Economics, Texas A&M University, Education paper for simulation class.
Thorne, F.S., 2004. Measuring the competitiveness of Irish Agriculture (1996-2000). The rural economy research center working paper series, Working paper 04-WP-RE-02. http://www.teagasc.ie/research/reports/ruraldevelopment/5065/eopr-5065.pdf
Uddin, M. M., Sultana, M. N., Ndambi, O. A., Hemme, T., Peters, K. J., 2010. A farm economic analysis in different dairy production systems in Bangladesh. Livestock Research for Rural Development. Volume 22, Article # 122. Available at: http://www.lrrd.org/lrrd22/7/uddi22122.htm
Uddin, M.M., Sultana, M.N., Brümmer, B and Peters, K.J. 2012. Assessing the impact of dairy policies on farm-level profits in dairy farms in Bangladesh: Benchmarking for rural livelihoods improvement policy. Journal of Reviews on Global Economics, 1, 124-138.
vanCalker, K.J., Berentsen, P.B.M., Giesen, G.W.J., Huirne, R.B.M., 2005. Identifying and ranking attributes that determine sustainability in Dutch dairy farming. Agriculture and Human Values 22, 53-63.
http://dx.doi.org/10.1007/s10460-004-7230-3
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Published
2014-08-11
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Hemme, T., Uddin, M. M., & Ndambi, O. A. (2014). Benchmarking Cost of Milk Production in 46 Countries. Journal of Reviews on Global Economics, 3, 254–270. https://doi.org/10.6000/1929-7092.2014.03.20
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