An Econonic Analysis of Smallholder Dairy Farms in Thailand

income received on the sample farms. The return oninvestment was analysed based on total and income fromthe dairy enterprise.Eight sample farms earned profits from their dairybusiness between about 6 and 41%. The other tworecorded negative profits of about 20 and 1%. The farmwith the severe deficit (20%) raised fewer cows (33% oftotal animals) but more replacements (53% of totalanimals) on farm and earned no income from the sale ofdry cow dung due to a shortage of labor. However thisfarm had off-farm income from selling householdfurniture. The slight deficit (1%) for the other farm wasdue to no income from the sale of dry cow dung. Cowdung from both these farms was given to relatives in theother households.If income were from dairy farming alone, onlythree farms would achieve profits (about 2.50, 4 and6.50% respectively). The rest incurred deficits of 4 to48%. The dividend from the Cooperative and the sale ofculled animals helped farmers cover costs. The mostefficient dairy farm as shown by the benefit-cost ratio(total benefit/total cash cost) achieved a ratio of 1.41 (seeTable 2).Cash cost and return. All farms had total incomeover total cash cost ranging from at the 18 to 138% overthe one year period (Table 2). The value of livestockdeclined on most of the farms (5 to 86%) but increasedon three farms (6 to 17%). The decline in the value oflivestock is due to the sale of culled animals. One farmerwas forced to sell milking cows due to a shortage offamily labor.Cost and return of milk productionTo compare economic efficiency of milkproduction among the sample farms, costs and returnsfor one kilogram of raw milk produced on farms wereanalysed. The analyses were based on three differentcases i.e. A) the total number of animals B) the numberof cows, milking and dry, and C) the number of milkingcows only. The results are shown in Table 3.In the first case A, the cost of 1 kg milk yield ofsample farms was in the range of 8.58 to 16.65 baht(average 10.46 baht). Seven out of 10 farms faced adeficit (6 to 48%). Three farms could make profit (2 to4%) because the farmers were either able to seekavailable sources of roughage at lower cost or rear alarger ratio of milking cows.For case B, the cost of 1 kg of milk varied from5.03 to 8.14 baht (average 6.93 baht). All farms hadprofits (8 to 77%). The differences were due to the in thenumber of cows raised, their milk yield and the cashcosts and milk price obtained.For case C, the cost of 1 kg of milk was 4.44 to6.87 baht (average 5.63 baht). Profit ranged from 37 to100%. The difference between cost B and cost C, 1.34baht per kg milk, was the cost for raising cows duringthe dry period. Similarly the difference between cost Aand cost B averaged 3.53 baht per kg milk was the costof raising the replacement on farms. This amount was asmuch as a half of the cost for raising cows.Table 2. Cash cost and return, and change of stock assets of sample farms from February 1997 to January 1998Farm Total cash Total cash Sources of cash income (baht) Net cash return Stock assetno. cost (baht) income (baht) Milk Others (%) change (%)1 151,427 179,088 117,528 61,560 18.27 -34.322 144,407 343,164 198,892 144,272 137.64 -86.283 113,641 215,759 179,288 36,471 89.86 - 4.654 244,668 365,195 289,114 76,081 49.26 - 9.975 261,849 512,837 372,307 140,530 95.85 - 8.966 270,925 454,527 356,445 98,082 67.77 -23.647 238,557 431,471 331,461 100,010 80.87 -10.788 299,569 443,800 381,351 62,449 48.15 + 6.099 559,840 947,543 782,313 165,230 69.25 + 7.3710 767,131 1,014,650 837,853 176,797 32.27 +16.83

Table 3. Cost and return of milk production of sample farms based on numbers of (A) total animals,(B) cows,and (C) milking cowsFarm no. Cost per kg milk yield (Baht) Benefit per unit cost (%)A B C A B C1 16.65 8.14 6.37 -47.51 7.82 37.212 11.28 6.90 4.96 -21.74 29.68 80.243 9.36 7.66 6.43 - 5.88 14.81 37.014 10.45 7.67 6.53 -13.30 18.35 38.745 8.69 6.19 4.98 2.30 43.32 81.896 8.67 5.60 4.91 4.27 61.40 84.117 10.43 7.24 5.46 -14.86 8.26 27.228 10.44 8.23 6.87 -14.68 8.26 27.229 8.58 5.03 4.44 3.61 77.03 100.2310 10.08 6.64 5.30 -12.00 33.70 67.36Average 10.46 6.93 5.63 -11.98 31.66 61.67SD 2.36 1.07 0.85 15.36 22.98 25.16The results from this study clearlyshowed the need for surveyed farmers in NongPho Dairy Cooperative to reduce the cost ofdairy production. This could be accomplishedby:1. reducing feed cost (non-conventionalroughage should be provided cheaply andsufficiently for feeding during the periodof roughage shortage)2. reducing the numbers of replacement keptin the farms to 20-25% of the herd, and3. keeping daily records of cow productivityand culling low-yielding cows.ACKNOWLEDGEMENTThis research project has been financiallysupported by the Thailand Research Fund(TRF) through the TRF Senior ResearchFellow Program. The TRF is an autonomousresearch funding agency of the Government ofThailand.REFFERENCESAmir, P. and H.C. Knipscheer. 1989.Conducting On-farm Animal Research :Procedures & Economic Analysis.Singapore National Printers Ltd. 244 p.Bunyanuwat, K and U. Intarachote. 1996.Factors analysis in dairy production andcost of farmers in Saraburi province. ThaiAnimal Husbandry Magazine 5(30) : 45-52.Chamchong, C. and U. Sirichinda. 1994. Thestudy of milk price should be obtained byfarmers. Research Report submitted toNational Research Council of Thailand.Kasetsart University, Bangkok.Chamchong, C. 1996. Components of cost andreturn in dairy farming. In Principle andTechniques for Cost Analysis in DairyMilk Production. P. Tantichalernpol (ed.)Chulalongkorn University Press, Bangkok.pp. 13-20.Chantalakhana, C. 1995. Dairy development :a case of small-farm production for urbanconsumption. In Supply of LivestockProducts to Rapidly Expanding UrbanPopulations. W.Y. Kim and J.K. Ha (eds.),Proceedings of WAAP/KSAS InternationalSymposium, Seoul, Korea. pp 282-292.Karnjanasirm, K. 1995. Impact evaluation onongoing dairy promotion project at NakhonPathom Province. MS. Thesis, KasetsartUniversity, Bangkok.Skunmun, P., J. Boonsom, S. Kaewsuwan andC. Chantalakhana. 1999. Environmentalconditions and resource management insmallholder dairy farms in Thailand. I.Production systems and management ofresources. Asian-Aus. J. Anim. Sci. 12(2)215-219.Email: swkppb@nontri.ku.ac.th