The Influence of Scale on the Profitability of Culture-Cross Breed Dairy Cattle Farms in Western Part of Turkey

Abstract

The primary purpose of this study was to determine the influence of scale on the profitability of culture-cross breed dairy cattle farms of different sizes associated with Erikler Cooperative, which is located in Kirklareli (A province in Western part of Turkey). According to annual milk quantity delivered per farm to the cooperative, the farms were classified into 3 groups (small (<10.000 kg), medium (10.000-40.000 kg) and large-scale (>40.000 kg). The data belonged to 2006 production period and were collected from 43 dairy cattle farms face-to face by means of questionnaires. While small-scale dairy cattle farms could not afford to cover even the variable costs, which mean the gross profit was negative, the profitability rate of large-scale farms was 24.7%, which is higher than the nominal interest rate and inflation level in Turkey. Large-scale dairy cattle farms were more successful compared to small and medium scale farms in terms of efficiency of major inputs used (labor demand and feed intake per cow). Total production elasticity of inputs was 1.24 indicating that there were increasing return to scale for dairy cattle farms.