Calculus of cost in dairy cattle sector and costing of a typical milk processing unit using the Activity Based Costing method

The dairy supply chain in Greece has undergone significant changes since 2000. Large-scale business farms that operate with high production cost under intensive production systems have been emerged. These farms are directly supported by the dairy processing industry, which has been modernized to adapt to a highly competitive market. The viability and competitiveness of the production units, both at the level of primary and secondary sector of economy, are directly linked to the efficient operation of the supply chain, the rational management of the available resources and the making of sound administrative and business decisions.The supply chain of dairy cattle products is investigated in a holistic manner through the estimation of the profitability of the dairy farms and the production cost of milk, the description of the value chain of dairy products and the assessment of its mechanisms and the costing of the dairy processed products using both the established costing method and the activity-based costing method. The results of these two costing methods are evaluated through a comparative descriptive analysis.The main results indicate that the intensification and modernization of the farms has led to a high production cost of raw milk. The results reveal the weaknesses that exist mainly in the utilization of capital, while, at the same time, it is pointed out that higher milk yields are related to improved economic performance. The SWOT and the Stakeholder analysis highlight the existing drawbacks in the function of the supply chain of dairy products in Greece and indicate that the presence of unfair trading practices along this supply chain is not very strong. The results also show a divergence among the two costing methods in the estimated production cost of the processed products and, more specifically, an underestimation of the production cost of the products for which several production departments are employed occurs when the traditional costing method is used.Η αλυσίδα εφοδιασμού γαλακτοκομικών προϊόντων βοοτροφίας στην Ελλάδα έχει βιώσει σημαντικές αλλαγές από το 2000. Δημιουργήθηκαν μεγάλου μεγέθους εκμεταλλεύσεις επιχειρηματικής μορφής, οι οποίες αποφάσισαν να εντατικοποιήσουν το σύστημα παραγωγής οδηγώντας έτσι, στην αύξηση του κόστους παραγωγής του γάλακτος. Αυτές οι εκμεταλλεύσεις υποστηρίζονται άμεσα από τη βιομηχανία μεταποίησης του αγελαδινού γάλακτος, οι οποίες έχουν εκσυγχρονιστεί προσαρμοζόμενες στις έντονα ανταγωνιστικές συνθήκες της αγοράς. Η βιωσιμότητα και η ανταγωνιστικότητα των παραγωγικών μονάδων, τόσο σε επίπεδο πρωτογενούς, όσο και σε επίπεδο δευτερογενούς παραγωγής, συνδέεται άμεσα με την αποτελεσματική λειτουργία της αλυσίδας εφοδιασμού, την ορθολογική διαχείριση των διαθέσιμων πόρων και τη λήψη ορθών διοικητικών και επιχειρηματικών αποφάσεων. Η αλυσίδα εφοδιασμού της γαλακτοπαραγωγού βοοτροφίας διερευνάται ολιστικά με την εκτίμησητων οικονομικών αποτελεσμάτων των βοοτροφικών εκμεταλλεύσεων και την κοστολόγηση του γάλακτος, με την περιγραφή της αλυσίδας αξίας των γαλακτοκομικών προϊόντων και την παρουσίαση των μηχανισμών μετακύλισης και μεταβολής των τιμών κατά μήκος αυτής της αλυσίδας, και την κοστολόγηση των γαλακτοκομικών προϊόντων με την εφαρμογή της κλασικής μεθόδου κοστολόγησης και της κατά δραστηριότητα κοστολόγησης μεθόδου. Παράλληλα, πραγματοποιείται μια συγκριτική ερμηνεία των αποτελεσμάτων των δύο μεθόδων κοστολόγησης. Από τα κύρια αποτελέσματα προκύπτει ότι το κόστος παραγωγής γάλακτος στην πρωτογενή παραγωγή είναι ιδιαίτερα υψηλό, γεγονός που προκύπτει από την εντατικοποίηση και την εκμηχάνιση των εκμεταλλεύσεων. Υποδεικνύονται οι αδυναμίες που υπάρχουν στην οργάνωση κυρίως του κεφαλαίου, ενώ προκύπτει βελτίωση της οικονομικότητας των μονάδων με την αύξηση των αποδόσεων σε γάλα. Η εφαρμογή της ανάλυσης SWOT και της Stakeholder ανάλυσης αναδεικνύουν τα υφιστάμενα προβλήματα σε ολόκληρη την αλυσίδα γαλακτοκομικών προϊόντων βοοτροφίας στην Ελλάδα και υποδεικνύουν ότι οι Αθέμιτες Εμπορικές Πρακτικές δεν έχουν έντονη παρουσία στη συγκεκριμένη αλυσίδα εφοδιασμού. Τα αποτελέσματα επίσης υπέδειξαν απόκλιση στην εκτίμηση του κόστους παραγωγής των προϊόντων μεταξύ των δύο μεθόδων κοστολόγησης και ειδικότερα υποεκτίμηση του κόστους παραγωγής των προϊόντων για την παραγωγή των οποίων απασχολούνται αρκετά τμήματα παραγωγής της επιχείρησης με την παραδοσιακή μέθοδο κοστολόγησης

Evolution of the Structure and Economic Management of the Dairy Cow Sector

In this paper, we examine the changes in the structural, economic and managerial characteristics of dairy cow farms during their shift towards a new business model that operates under a highly intensified system. Based on farm accounting data from Greek dairy farms for the 2004–2017 period, the main technical and financial indicators are estimated and compared to provide a clear picture of the structural adjustment of the dairy cow sector during the last two decades. The outcomes and the implications described herein are relevant for specialized dairy farms in most European countries. The results indicate that modern farms breed a larger number of cows, achieve a higher milk yield, rely on high compound feed intakes and operate under an intensive pattern. This trend is even more evident in larger farms with an entrepreneurial nature, whose structural adjustments occurred in a more concise and effective manner. The latter benefited from a downward shift in their long-term average cost curves and the resulting economies of scale, achieving reasonable gross margins despite the ever-increasing feeding costs. Nowadays, the European dairy cow sector faces major economic, social and environmental challenges that must be properly addressed to secure its survival. The findings of this study provide insights concerning the efficient financial management of dairy farms that can support the development of strategies and policy recommendations that will enhance the resilience and sustainability of the sector

Impact of Feeding Pattern on the Structure and the Economic Performance of Dairy Cow Sector

In dairy farms, the feeding cost, which includes the expenses for purchased feed but also the expenses for feed production, constitutes a very large part of production cost (more than 60%), which indicates the economic importance of the feeding strategy. This study discerns three different feeding strategies: landless farms only purchasing feed from markets (“Purchasing”), farms for which home-grown feeds stand for more than 10% of feeding costs (“Producing”) and farms with less than 10% home-grown feeds (“Multi-purpose”). Based on technical and economic data from 47 dairy cow farms in Greece, alternative scenarios of development of the dairy sector are determined taking into account the dependence on on-farm feed production. Through a parametric programming model, the study provides insights regarding the optimal structure of the system under different scenarios (changing availability of variable capital, changes in milk prices). The results indicate that “Purchasing” farms are the preferred option when variable capital is abundant and milk prices are satisfactory, while “Producing” are the ones surviving with milk prices significantly lower than the actual ones in Greece and European Union. “Multi-purpose” farms perform worse than the other two and are sidelined in both scenarios, as they do not seem to be able to specialize in the dairy enterprise or in crop production and thus to minimize costs

Evolution of the Structure and Economic Management of the Dairy Cow Sector

In this paper, we examine the changes in the structural, economic and managerial characteristics of dairy cow farms during their shift towards a new business model that operates under a highly intensified system. Based on farm accounting data from Greek dairy farms for the 2004–2017 period, the main technical and financial indicators are estimated and compared to provide a clear picture of the structural adjustment of the dairy cow sector during the last two decades. The outcomes and the implications described herein are relevant for specialized dairy farms in most European countries. The results indicate that modern farms breed a larger number of cows, achieve a higher milk yield, rely on high compound feed intakes and operate under an intensive pattern. This trend is even more evident in larger farms with an entrepreneurial nature, whose structural adjustments occurred in a more concise and effective manner. The latter benefited from a downward shift in their long-term average cost curves and the resulting economies of scale, achieving reasonable gross margins despite the ever-increasing feeding costs. Nowadays, the European dairy cow sector faces major economic, social and environmental challenges that must be properly addressed to secure its survival. The findings of this study provide insights concerning the efficient financial management of dairy farms that can support the development of strategies and policy recommendations that will enhance the resilience and sustainability of the sector

Entrepreneurship in Dairy Cattle Sector: Key Features of Successful Administration and Management

In this study, data envelopment analysis is applied to 47 dairy cattle farms to estimate their level of efficiency in the utilization of the available resources and to identify the most efficient ones. The analysis is based on technical and economic data collected through a farm management survey. The main structural and financial characteristics of the most efficient farms are presented, revealing the features that make them better than their peers. A comparative financial analysis is applied between the efficient and inefficient farms, highlighting the appropriate farm structure and determining the major cost drivers in modern dairy cattle farming. The results show that there is still room for improvement in intensive dairy farming. Dairy cattle farms must operate with increased variable cost and utilize their infrastructure at full capacity to decrease their fixed cost per cow. Farms should increase their economic resilience and be less risk averse in an environment where margins to lower production costs in highly intensive farms have been narrowed down. The findings of this study verify that dairy cattle farms of entrepreneurial mindset have the potential to rise to the future economic, environmental and social challenges that will affect the survival of the sector

Efficiency Analysis and Identification of Best Practices and Innovations in Dairy Sheep Farming

The adoption of the best practices is crucial for the survival of the dairy sheep farms that operate under extensive and/or semi-extensive systems. In this study, an efficiency analysis was implemented to reveal the best observed practices applied by the more efficient dairy sheep farms. Data Envelopment Analysis was used on data from 60 dairy sheep farms that rear Manech or Basco-bearnaise, and Lacaune breeds under semi-extensive systems in France. The main characteristics of the most efficient farms are presented and a comparative economic analysis is applied between the fully efficient and less efficient farms, highlighting the optimal farm structure and determining the major cost drivers in sheep farming. The most efficient farmers provided information within the iSAGE Horizon 2020 project regarding the management practices that enhance their sustainability. The results show that there is room for improvement in semi-extensive dairy sheep farming. The most efficient farms rear smaller flocks than the less efficient farms and achieve higher milk yields. Fixed capital, labor, and feeding constitute the main cost drivers. Results show that farms should exploit economies of scale in the use of labor and infrastructure to reduce their cost per product, as well as their uptake practices and innovations, related mainly to modern breeding and reproduction methods, efficient feeding practices and digital technologies

Effect of Chitosan and Alginate-Based Edible Membranes with Oregano Essential Oil and Olive Oil in the Microbiological, Physicochemical and Organoleptic Characteristics of Mutton

Edible chitosan or alginate coatings and their combinations with oregano essential oil or olive oil, have been examined for their effect on the microbiological, physicochemical and organoleptic characteristics of mutton. The results indicated that these edible coatings can contribute to maintaining good quality characteristics and extending mutton shelf-life. The total mesophilic counts in mutton ranged from 3.48 to 8.00 log10 CFU/g, the total psychrophilic counts from 4.00 to 9.50 log10 CFU/g, the B. thermosphacta counts from 2.30 to 7.77 log10 CFU/g and the lactic acid bacteria counts from 2.00 to 5.85 log10 CFU/g. Chitosan coatings significantly (p 10 cfu/g), the B. thermosphacta and the lactic acid bacteria counts in mutton. Alginate exhibited a lower L* value and a higher a* value and chroma compared with the control and chitosan lots. No significant differences were observed in the chemical composition of meat pieces among the experimental groups. Oregano oil positively affected the sensory attributes of meat. The most favourable combination, based on the microbiological counts, the organoleptic characteristics and the shelf-life extension of mutton, was that of chitosan with oregano essential oil

Socioeconomic Appraisal of an Early Prevention System against Toxic Conditions in Mussel Aquaculture

This paper examines the financial viability and potential socioeconomic effects of introducing and operating an automated, remote-controlled management system for mussel farms which uses probes of temperature, dissolved oxygen, and conductivity associated with prediction software to demonstrate the potential need for mussel movement between marine areas. This system provides an early warning to farmers regarding the presence of toxins in aquatic ecosystems, thus contributing to saving mussel production and avoidikng significant economic losses. The analysis combines two established methodological tools in agricultural economics (linear programming and cost-benefit analysis) and provides estimates of the Net Present Value of the investment under two scenarios—one reflecting the existing situation and one a possible future situation where the mussel production system is expanded. The results of the analysis reveal the mid- and long-term effects of using the automated system, both of which demonstrate that the system is economically viable even if it contributes to saving mussel production from toxicity occurrence for only one year during its period of operation. The annual gross margin in the first scenario was €386,069 but almost tripled in the second scenario (€1,154,649). In addition, the future development and expansion of the mussel sector will likely be based on larger farms with an entrepreneurial and exporting orientation where risk mitigation systems, such as the one appraised in this paper, can play an important role

Dietary Supplementation of Attapulgite Improves Growth Performance in Pigs from Weaning to Slaughter

The objective of the present study was to investigate the effect of dietary supplementation of attapulgite on the performance of fattening pigs from weaning to slaughter under field conditions in three commercial farrow to finish herds. In total 1890 pigs were used for six months: 720 pigs in Farms A and B, respectively and 450 pigs in Farm C. The pigs were equally allocated in three dietary treatments: CON, standard diet in each growing phase; ATT, standard diet that was supplemented with attapulgite at 7 kg/tn of feed; and ATT+, standard diet that was supplemented with 8 kg/tn of feed with a compound product based on attapulgite. Pigs that were fed diets that were supplemented with attapulgite (ATT and ATT+) had significantly higher (p < 0.05) average daily feed intake (ADFI) and a better feed conversion ratio (FCR), compared to the control (CON). In conclusion, attapulgite supplementation in the diet of pigs from weaning to slaughter can improve their performance in commercial farms

FarmDain, a Decision Support System for Dairy Sheep and Goat Production

Managing a milk zone in the dairy industry is demanding. Data necessary for efficient management are difficult to acquire because they usually must be collected in organized and standardized ways. On the other hand, software practices constantly provide new tools that can go beyond simple record-keeping practices and add value to the data. In this work, FarmDain is a novel web-based application for sheep and goat management. It aims to improve milk production and processing by digitizing the value chain in data acquisition, processing and visualization between dairy production businesses and their milk suppliers. FarmDain uses state-of-the-art software technologies to model the data collection process and provides a straightforward user interface to facilitate data processing and visualization. Using the app in a case study carried out for 12 months in a dairy sheep farm resulted in lower feeding cost per milked ewe by 5.5% when ewes were allocated into high and low milk production groups compared to the scenario of remaining in one single group. Furthermore, based on reports provided by the app, culling and genetic selection decisions were made to improve the overall farm performance. Similar practices were applied in all farms optimizing their productivity, which led to increased profitability for farms and the Dairy Factory