Partial analysis of capital productivity in Hungarian dairy farming

Geszti, Szilárd – Borbély, Csaba

Dairy farming is considered to be the heavy industry of agriculture; the reason is the high amount of capital invested. This high level of asset allocation is the result of the long-term use of capital. In the long term, the amount of land and labour utilised in agriculture is expected to decrease, which in the end necessarily leads to the increase of capital allocated as a production factor. By the mid of the 80’s, the infrastructure of dairy farms became outdated, which also induced high capital investment (Széles 2002). Along with the strengthening role of capital, research relating to allocated capital is important, because only those farms which use the capital available in the best possible way will produce profitably in the future.

The most complex task is the analysis of capital among production factors. Primarily, the difficulty of the analysis comes from the diverse definition and appearance of capital. Measurement of capital is a widely debated issue in economic theories because of its heterogeneous nature (Pearce, 1993).

In the current research, through the analysis of the capital productivity of Hungarian dairy farms, the focus was placed on the relation of fixed capital and (1000 Euro) milk yield (kg FCM). In order to reveal the causes of and reasons for capital productivity, the analysis was complemented with a detailed cost analysis. To get information on the international competitiveness of the farms, the Hungarian figures were compared to the European figures from the database of the European Dairy Farmers (EDF).

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