Estimate of Average Production Costs for Three Dairies of Maule Region, Chile: A Case Study

Germán Lobos A.1, Mavel Miño C., Erika González M. y Anita Prizant S.

Monthly average costs of milk production were estimated for 1998 in three dairies located in Linares province, (35º51’ S lat. and 71º35’ W long), Maule Region, Chile. The farms were associated with PROLECHE S.A., formed with the financial support of the Production Development Corporation (CORFO) for associative administration. The relevant discount rate was estimated based on a Capital Asset Pricing Model (CAPM) and Weighted Average Cost of Capital (WACC). The total average cost per liter of milk was calculated adding average cost of capital and average operating cost. The principal results indicate that the total average cost fluctuates between US$0.276 and US$0.619 for farm 1, between US$0.171 and US$0.282 for farm 2 and between US$0.160 and US$0.316 for farm 3. The lower total average costs in spring and summer months were obtained due to higher milk production and the availability of lower cost forage. Farms 2 and 3 are located in the midrange of annual total average costs, while the value for farm 1 is high with respect to values reported elsewhere in the literature.

Keywords: average costs, dairies, discount rate.
1 Universidad de Talca, Facultad de Ciencias Empresariales, Casilla 721, Talca, Chile. E-mail: globos@pehuenche.utalca.cl.