(Instituto Nacional de Investigacion y Tecnologia Agraria y Alimentaria (INIA), 2014) Aldanondo Ochoa, Ana María; Casanovas Oliva, Valero; Gestión de Empresas; Enpresen Kudeaketa
This paper analyses the impact of livestock feed prices and pasture quality on the long and short-term costs of milk
production in a region of Spain (Navarre). The empirical results are obtained from the estimation of a flexible shortrun
cost function, followed by the approximation of long-run equilibrium based on the quasi-fixed factors adjusted to
their optimal levels. The results reveal a high sensitivity of milk production costs to changes in livestock feed prices
due to two reasons. One is that, as milk production expands, it tends to become technologically more intensive. The
other is that, in the current structure of dairy farming, land input is suboptimal, particularly in the case of large farms
and areas of poor pasture. The results reveal that short-run substitution between feed and livestock is a potential strategy
for farms to respond to feed price increases. They also suggest that structural policies designed to strengthen the dairy
sector’s competitiveness should vary according to agro-climatic conditions. In areas of poor pasture, herd growth might
be used as a long-term measure to increase competitiveness through economies of scale
