Economies of scale and economies of scope in milk production. Techno-economic and environmental analysis in mixed crop and livestok French dairy farms

Transcription

1 Economies of scale and economies of scope in milk production. Techno-economic and environmental analysis in mixed crop and livestok French dairy farms Christophe Perrot - département Economie - Institut de l Elevage Hélène Chambaut - département Techniques d élevage et qualité, Dominique Caillaud département Actions Régionales 1

2 Issues and Objectives Mixed crop-dairy farming systems: a successful French paradox? High profitability according to European standards for dairy farms (not the case until recently for French specialized dairy farms) Favored by French dairy policy especially outside the main milk fields But signs of instability (competition between productions) with potential socioeconomic, territorial and environnemental impacts (direct and undirect employment, dairy processing, ) New challenges for food production energy and environmental issues. Produce more and better Is the stabilization of these mixed farming systems achievable? How to optimize their pratices (crop&livestosck integrated approach)? Which tools to be used: CAP, 1 st pillar, 2 nd pillar and national measures, R&D involving outsider farmers, farm advisory system 2

3 Almost 25% of French dairy cows in mixed crop&livestock systems French dairy farms (2010) French dairy sector zoning mixed crop-dairy (23%) 7% with pigs/poultry Others dairy/dairy+beef Important and specific component of French daiy sector Milk fields (lowland areas) 45% dairy farms 49% milk prod Mixed crop&livetosk areas 29% dairy farms 32% milk prod Source: Agreste agricultural census 2010 analysis Institut de l Elevage Moutains 23% dairy farms 16% milk prod 3

4 Important and specific component of French daiy sector Almost 25% of French dairy cows in mixed crop&livestock systems. Stable (be aware of the sensitivity of European typology to crop prices). 16% in Germany (East 50%, West 5-10%), 8% in Italy, 5% in UK, 4% in Denmark. Half of levels of Early 90s (EU FADN) High labour productivity and income In France In Europe 4

5 /WU Family Farm Income by unpaid Work Unit ( /WU) French dairy farms Mixed crop-dairy Lowland dairy (or dairy&beef) Mountain dairy (or dairy&beef) Source : Agreste RICA -traitement Institut de l Elevage 5

6 Mixed crop&livestock systems: an agronomic ideal Historical concept (Sixteenth Eighteenth century). Agricultural revolution (fodder crops) , Golden age, growing urban demand for milk and meat products Core for agricultural science (crop rotation; soil fertility; carbon, nitrogen, mineral cycles) 20th century. Pushing the limits. Inputs (P NO3 energy) and mechanization. Potentially, a productive, self-sufficient (local diversified ressources), efficient, environmental friendly way of producing milk 6

7 Economy of scale vs economy of scope: diluting fixed costs by producing more or optimizing factors use by producing several complementary products? Better self-sufficiency (manure<->straw+concentrate feed) More labour intensive than specialized crop systems More resilient in time of volatility? Mixed crop-dairy systems: economic advantage or specificity? 7

8 Cost of milk production: a comparative approach Own calculation for cost of milk production Fixed costs, overhead costs and labour costs (calculated for family labour) are allocated to milk/beef/crop production with physical regressors (heads of animal by type of management, areas of crops, farmuse cereals, forage crops) rather than economic regressors (sensitive to volatility of prices) Comparison between types of farming in lowland areas: Mixed crop&dairy / Specialized dairy / Dairy & beef In French FADN or French Livestock Farms Network (reference commercial farms, in cooperation with French advisory services) 8

9 Milk costs of production. Main characteristics driven by intensification of production systems and high labour productivity Differences Mixed crop-daiy/livestock systems /1000l FADN 2008 French Farm Network 2008 Total cost of milk production Labour cost (including family labour) Cost excluding labour In which Specific costs in which feed cost (buying only) In which Overhead & Fixed costs in which mechanization

10 Mixed crop-dairy farms get (also/first) economies of scale Bigger farms and milk production FADN 2008 French Farm Network 2008 Mixed cropdairy difference difference farms Livestock dairy farms Livestock dairy farms Mixed cropdairy farms Milk production (l) AWU UAA (ha) Analysis of variance for cost of milk production (and components) economies of scope (mixed crop or mixed beef effects), economies of scale (size effect), feeding systems (grass-based or maize), region 10

11 From diseconomies of scale (Early 00s, investments pushed by public fundings for Nitrates Dr) to economies of scale (Late 00s, French phasing out quota system) Cost of milk production (Cash costs+depreciation without opportunity costs (family labour, ) ). Regression coefficient (Evolution for l more). statistically significant (O: ns, : <5%, : <1%) 4 2 /1000l Source Agreste RICA traitement Institut de l Elevage More volume to farmers/saturation of equipments but more feed bought by bigger dairy units (+4 /1000l for l) To add Higher labour productivity: -12 /1000l for l including family labour 11

12 Succesfull mainstream and FADN. Farm trajectories more difficult alternatives Mainly farms involved in growth and intensification: more milk and crop production with higher input per ha. Good economic results (especially with high prices 2008) High labour productivity and input efficiency 20% of farms explore other ways, more grass-based, more farm-use of crops (21% of concentrate feed), less input per ha. Lower growth of production and labour productivity, lower income especially with high prices (2008) French Farm Network. Several steps identified: 1. Dairy intensification to maximize crop production. Separate operations in the same farm (except straw/manure) 2. Yields not at the top but better margins by unit with cost-cutting measures 3. Less maize based system, higher protein feed self-sufficiency, more complexity to manage, less productivity of labour 4. Organic farming brings Added Value missing at former step 12

13 Conclusion More opportunities to produce more milk at farm level (end of quotas, ageing of dairy farmers, ) High prices for crop production Mixed crop-dairy farms are incented to reach economies of scale both for milk and crop production (by reducing the land devoted to less productive forage), or to give up livestock production rather than economies of scope Taking into account externalities (+ & -) could modify ranking of types of farm management but is not on the line How to compensate the lower productivity of alternative ways for some farmers volunteers? How to stabilize livestock for the mainstream management? 13

14 Thank you for attention 14

15 ( :effet significatif à 1% à 5%, en maigre ou ns : non signif à 5%) Economies (-) ou Diseconomies (+) of scale /1000l for l milk/year Economies (-) ou Diseconomies (+) of scope ( mixed crop) /1000l Economies (-) ou Diseconomies (+) of scope (mixed beef) /1000l Feeding system (grass_based or medium compared to maize _based) Region Effect (+ or against Brittany) /1000l BRE PDL BNO Nord Est ZI Total cost of milk production Labour cost (incl fam) ns ns ns ns Total cost without labour ns ns ns Total cost without labour Only between 200 et l -6 ns ns ns Specific costs ns +10 ns Feed (buying) Fertilizer, Others for Livestock ns ns -4 ns ns +7-6 ns ns Fixed & Overhead ns ns 0-14 ns ns ns -20 Mechanization -2 ns ns -15 ns 0-6 ns -8 ns -6 Buildings ns ns 0 ns ns ns +6-6 Others ns 0-9 ns ns -4-6 Rent ns ns ns ns ns ns Source: Agreste FADN 2008 analysis Institut de l Elevage