Understanding how milk-producing countries estimate costs of dairy production: A comparative review

Benchmarking milk cost of production (CoP) helps identify economic performance disparities, guide business decisions, and shape policy regulations across the dairy industry. However, the reliability of CoP data is heavily influenced by the methodologies employed. Comparisons remain challenging due to variations in farm business characteristics, accounting regulations, market dynamics, and political considerations. Therefore, this review aims to explore the diverse CoP methodologies to compare the cost frameworks and revenues of dairy enterprises in countries that are significant producers in the global market. The analysis includes countries from the EU27 (Germany, France, the Netherlands, Poland, Italy, and Ireland), along with the United States, Canada, Brazil, Australia, and New Zealand, in comparison with global dairy network benchmarks. The findings clearly demonstrate that methods for calculating milk CoP vary considerably among countries. In addition, discrepancies in CoP methods may distort the disparities in the economic performance of dairy operations. This study concludes that variations in cost frameworks across countries hinder effective cross-country comparisons of milk CoP, and that current harmonised frameworks provide decent estimations when compared to national calculations. To address this issue, it is recommended that global dairy networks develop harmonised methodologies that consider existing official national methods and local contexts, thereby enhancing policy relevance and improving comparison accuracy.

Freie Universität Bozen
Universitas Gadjah Mada