PR - DETERMINANTS OF FULL COSTS OF DAIRY PRODUCTION IN SWITZERLAND – A COMPARISON OF TWO DISPROPORTIONATE JOINT COSTS ALLOCATIONS

Abstract:

By means of a maximum entropy joint cost allocation model with farm-specific allocation factors that account for economies of scale, full costs of 198 milk producers in the Swiss plain region are calculated. The effect of farm-specific allocation factors is found to be small; nevertheless it contributes to a more precise joint cost allocation to the enterprises of a farm. Average milk costs are CHF 1.31/kg – twice as high as producer milk price – and differ substantially between farms. In a regression analysis, the herd size and the milk yield per cow turned out to be the major cost-cutting factors.

Keywords: Full cost analysis; maximum entropy; disproportionate joint cost allocation; milk; Switzerland; FADN