Problems of formation and increase of the economic efficiency of milk production

• Main Author: Valerii Kolosha
• Format: Article
• Language: English
• Published: Institute of Eastern European Research and Consulting 2018-12-01
• Series: Agricultural and Resource Economics
• Subjects: efficiency; relative efficiency factor; animal productivity; co-operation of production; profitability
• Online Access: http://are-journal.com/are/article/view/210

Purpose. The purpose of the study is to review and summarise the views on the evaluation of modern methods and approaches to the determination of the economic efficiency of milk production. Methodology / approach. Analysis of literary sources, critical assessment of different views in terms of assessment of milk production efficiency and development of own proposal in terms of this assessment were selected as the study method. Results. It has been established that for the diary livestock sector, the most common practice of assessing economic efficiency is through the calculation of gross production per 1 average annual animal head, 1 man-hour, 1 centner of feed unit, UAH 1 of feed costs, UAH 1 of expenses; gross income per 1 head, per 1 man-hour; net income per 1 head, 1 man-hour, UAH 1 expenses; level of profitability and labour expense; productivity of cattle and poultry. It is stated that Ukraine has an urgent problem of raising the level of economic efficiency of milk production. It is noted that the unprofitableness of the livestock sector over a considerable period of time is one of the main factors in reducing both the livestock and the volumes of milk production. Originality / scientific novelty. In order to assess the level of efficiency in dairy farming, it is proposed to calculate relative efficiency factor of expenditure in livestock sector. This parameter evaluates the ratio of changes in the rate of production of consumable products (animal productivity) per one head of an animal with a change in the rate of expenditure. Its economic content is that when this factor is equal to 1, this suggests that the rate of change in expenses and resulting income, or productivity at the enterprise, coincide. If it is higher than 1, then there is an increasing return, and if lower than 1 – decreasing return. Practical value / implications. Under current conditions, development of the livestock sector is possible only under the conditions of the existence of an appropriate economic incentive mechanism for manufacturers, including state support through appropriate programs. This would allow enterprises to invest in the initial stages of production.