Economic and Productive Assessment of an Ordinary Small-Sized Dairy Enterprise in Southeast Brazil: A Multi-Year Study

Abstract

The objectives were to analyze the economic performance over time of a dairy enterprise located in southeast Brazil and to identify the key production parameters that contributed to economic performance, using a 10-year database. Two distinct approaches to evaluate production cost were analyzed. Briefly, the first approach involves variable and fixed costs (more traditional economic analysis), and the second involves total operating cost, consisting of effective operating costs and depreciation. From these two distinct approaches, we obtain as economic indicators the profitability I and profitability II, respectively. In addition, correlation between economic and productivity parameters was performed. Considering the first approach, revenue was not sufficient to cover the total cost and on average profitability I was negative. During three years, the break-even point was not achieved. Considering the second approach, gross profit margin was positive throughout the period, and consequently profitability II was positive. In general, production parameters were within the ordinary range observed in small-sized Brazilian dairy farms. From the correlations between economic and production parameters, we noted that correlation between average milk production per lactating cow and both measures of profit was present, indicating that if the average milk production per lactating cow was high, profit was positive. We conclude that this type of evaluation is important to assess the performance of a business, and consequently, for decision-making of dairy producers.