Development of a cost calculation model and cost index for sheep production

Camila Raineri,Augusto Hauber Gameiro,Thayla Sara Soares Stivari

doi:10.1590/s1806-92902015001200005

Camila Raineri, Augusto Hauber Gameiro + Show 1 more

Open Access

https://doi.org/10.1590/s1806-92902015001200005

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Abstract

The objective of this study was to develop a model for calculation and analysis of production costs of lamb and, from that, to elaborate a production cost index. Panel meetings were held in five regions of the state of Sao Paulo, Brazil, to define technical features of representative properties of lamb production, taken as a basis for the preparation of the cost calculation model. Then the model for production cost calculation was built. The third step consisted of monitoring prices of inputs used, calculating production costs along the studied period, and generating the cost index, by the Laspeyres model. Lastly, questionnaires were applied to sheep producers, to validate the cost index. The model for production cost calculation was planned to be of easy utilization by farmers, and simultaneously faithful to the theoretical principles. The adopted scheme of cost allocation followed the classification of variable, fixed operating, and income of factors. We generated cost indexes for each of the five studied regions, which were then aggregated in a state index, by weighting regional indexes by flock size. More than 97% of the answers to the validation questionnaires were positive, so we considered that the index reached a high level of approval. The application of Economic Theory is essential for the development of cost calculation models. The developed model has potential to generate important information that can help producers to make decisions. It can work in many contexts, and it can even be adapted to other livestock species. The production cost index for lamb was approved and can collaborate with the organization of the sheep agroindustrial system.

Highlights

The process of modernization of agriculture has made it necessary for production factors to be exploited to their maximum, in order to achieve higher productivity and profitability rates
Rural administration has become an alternative for the identification of the main bottlenecks in production systems
The “Ethic Committee on the Use of Animals” of the School of Veterinary Medicine and Animal Science of Universidade de São Paulo certified that this research is in accordance with the ethical principles in animal research adopted by the institution

Summary

Introduction

The process of modernization of agriculture has made it necessary for production factors to be exploited to their maximum, in order to achieve higher productivity and profitability rates. Rural administration has become an alternative for the identification of the main bottlenecks in production systems. This should raise information capable of creating interventions in order to increase their efficiency (Viana and Silveira, 2008). Primary production activity is the most vulnerable segment of agribusiness network due to its technology and management limitations. Since the producers cannot control the price of their product, they need to manage the variables under their control. Their economic outcome at a competition-based market depends on the management of production costs and economies of scale (Reis et al, 2001)

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