An Analysis of Cattle Milk Production Cost in Commercial Farms in Morocco

Abstract

The study of milk production cost structure in commercial cattle farms in Morocco reveals that feed expenses represent 68% of total inputs: 38% for concentrates and 30% for fodder. Other components of the production cost were represented by assets’ amortization (12%), labour (11%), miscellaneous (energy, cattle litter, etc.) (6%) and veterinary treatments and reproduction expenses (3%) The average milk production cost was 0.48 US $ per kg, whenever considering all these expenses. That figure was superior to the average farm gate milk price (0.30 US $ per kg), inducing that in numerous farms, dairy cattle production was not profitable. These negative economic results could not be corrected by calf crops’ sales, as they were already considered in the method used to calculate milk production cost. Even when family labour and assets’ amortization costs were not included in the determination of milk cost, it appeared that the dairy activity remained unprofitable. Furthermore, the study reveals that feed expenses increased a lot in late spring in comparison to late winter, due to more concentrates’ incorporation in cows’ diets. However, milk production cost did not vary significantly among these two seasons, as farmers sold cattle by the end of winter to limit economic losses related to milk production. These findings suggest that under current circumstances, the Moroccan cattle farmers are in a position of subsidizing the supply of cheap raw milk to the dairy industry and the consumers. Such a situation implies that many cattle farms might not sustain a long period of economic losses, unless further negotiations of income distribution throughout the supply chain are implemented.