Economic assessment of small-scale mountain dairy farms in South Tyrol depending on feed intake and breed

Abstract

Dairy mountain farms are economically disadvantaged due to small farm size and high production costs. However, these farms are of importance for the preservation of traditional landscapes and biodiversity, especially when they are managed extensively. The present study compares the economic situation of mountain dairy farms in South Tyrol that differ with respect to the amount of concentrates fed (low-input vs. high-input) and the breed used (Tyrolean Grey vs. Brown Swiss). The calculations show that low-input farms have lower variable costs but similar fixed costs and lower revenues compared to high-input farms. As a result, high-input farms are economically superior to low-input farms in terms of income per farm, per ha and per kg energy-corrected milk. Regarding the breeds, farms using the local breed Tyrolean Grey can compete with farms using the high-yielding breed Brown Swiss when subsidies are considered because of special payments for an endangered breed. The dominance of high-input farms can be explained with economies of scale and the milk to feed price ratio of about 1.8. Thus, the currently paid high milk price makes it economically worthwhile to produce as much milk as possible. The results thus point to the risk of intensification or abandonment of small mountain farms. In order to improve their economic situation and thus maintain small and low-input mountain dairy farms, it might be an option to connect subsidies with the feeding strategy and farm structure, pay premiums for value-added milk products or use taxes for concentrated feed to support extensive farms. Highlights Low-input farms achieve lower farm income Only small differences in farm income between breeds Herd size and milk yield per cow are decisive for farm income