The Influence of Scale on Profitability of Dairy Cattle Farms: a Case Study in Eastern Part of Turkey

Abstract

The research aims at the economic assessments of dairy cattle farms associated with Ikizler Village Agricultural Development Cooperative in Gevas District of Van Province, Turkey. The data of 2009 production period were collected from 37 farms associated with the Cooperative, through questionnaires applied face-to face with the producers. The number of cows per farm, daily milk yield per cow and lactation period were 4.46 head, 11.74 kg and 237.6 days, respectively. These figures increased according to farm scale. Daily feed intake per cow was 19.93 kg (12.37 kg roughage and 7.56 kg concentrated feeds). Feed costs consisted of 91.74 % of total variable costs. Unit milk costs (the costs of 1 kg milk) was $ 0.58 and decreased in line with farm scale being $ 0.73 for small-scale and $ 0.50 for large-scale farms. Economical profitability rates in terms of gross profit were 10.18 % and increased in proportion to farm scale being 5.95 % for small-scale and 16.91 % for large-scale farms. Cobb-Douglas Production Function revealed that the total production elasticity of inputs (Sigma bi) was 0.945, which means decreasing return to scale.