Sensitivity of contribution margin in milk production on family farms

Abstract

Milk production in Serbia is characterized by small surface of production and a large number of small family farms. For rural areas where this production is mostly carried out economic profitability of production contributes to becoming a family business. Research in this article relates to milk family farms of smaller and medium economic and production capacity, was applied the economic analysis in the period of three years and was calculated production results. Applying the calculation method computed total revenues and total costs, contribution margins, per cow and per liter of produced milk. By comparing the results obtained on farms A and B, conclusions was drawn, and the sensitivity of contribution margins determined by sensitivity analysis to change the given parameters (purchase prices of milk and milk produced per cow). Achievement higher contribution margins with satisfactory milk yield per cow and quality milk, as well acceptable purchase prices of milk, stability in production is realize.

Keywords

• case study
• costs
• revenues
• sensitive analysis