Costs of and incomes from milk production in dairy farms run by partnerships in the Western Transdanubian Region

Pogány, Éva – Sebesy, Zsanett – Teschner, Gergely – Troján, Szabolcs

Keywords: change in milk production, costs and prices, productivity, profitability, industry performance

Our study of the six dairy farms – with different number of cows and at various standards of production – run by partnerships found that even when milk yields were high (above 8,000 litres), milk production was only made profitable by the additional (quota-based) subsidies. When discounting the various subsidies granted for milk production, an increasing percentage of Hungarian dairy farmers make a loss. Two of the six farms studied liquidated their entire livestock in 2010.
Feed costs remain the largest component of dairy production at 52% - and even higher in herds with a high milk yield (above 8.000 litres). At the same time, higher yields reduced the share of wage costs, amortisation and general costs. Over a seven-year period (2004 to 2010) the costs of dairy production increased by nearly 20% nationally at farms run by partnerships, with feed costs going up by 14% and wage costs by 66%. The selling price of milk, however, remained stagnant in the same period (except in 2007-2008); in 2009 it was 5% lower than in 2004 and 25% lower than in 2008. The selling price of milk rose by 13% from 2009 to 2010 and by nearly 50% to the first quarter of 2011, accompanied by a 70% increase in subsidies.

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