The economic effects of grazing in small-scale lamb fattening production systems in central México through a scenario analysis.

The objective was to assess grazing as an element of profitability and competitiveness of a small-scale lamb fattening production system in central México and compare its economic performance by means of an analysis of scenarios. Two scenarios were analysed to assess the contribution of grazing on profitability and competitiveness. The first analysis was when grazing was the feed base, and secondly, costs of opportunity and economic impacts were studied under the assumption that sheep do not graze, and total feed has to be bought from external suppliers. The economic effect of grazing on the profitability was analysed by means of the Policy Analysis Matrix. Differences were found between strata; farmers with more than 70 sheep have the best profitability indices and the least vulnerability under the non-grazing scenario. Grazing had a positive effect reducing the cost of production and increasing competitiveness in the four strata assessed. However, farmers with higher technical level, specialised breeds and larger flocks (strata 3 and 4) have higher economic profits. The conclusion was that the profitability in fattening sheep is linked to taking advantage of grazing. However, to keep and improve the current financial performance, there is a need for the adoption of strategies for an integral improvement of the system and the adoption of better grazing management to further reduce production costs.

Evaluation of comparative advantages in the profitability and competitiveness of the small-scale dairy system of Tulancingo Valley, Mexico.

This article combines a Policy Analysis Matrix with a sensitivity and poverty line analysis with the objective of evaluating the economic contribution of comparative advantages to the private profitability and competitiveness of small-scale dairy systems. For 1 year, socioeconomic data were collected from 82 farms selected from four strata via statistical sampling. Two scenarios were established to determine the quantitative contribution of comparative advantages: (1) a simulated scenario, which accounted for the cost of purchasing the total food and the opportunity cost of the family labour force (FLF), and (2) an actual production scenario, which accounted for the cost of producing food and eliminating the payment of the FLF and included other income. The E3 and E4 producers were the most profitable and competitive in the simulated scenario and actual production scenario. Of the four scales evaluated, the E2 and E1 producers were the most efficient in taking advantage of the economic contribution provided by the comparative advantages in their own production of food and employment of the FLF, in addition to accounting for other income, a condition that increased their profitability by 171 and 144% and competitiveness by 346 and 273%, respectively. The poverty results indicated that only E3 and E4 producers were non-vulnerable in the simulated scenario and actual production scenario. The purchase of food was the comparative advantage with the greatest sensitivity to cost increases in the two scenarios analysed, which exacerbated the effect on the E1 and E2 producers.

Contribution of family labour to the profitability and competitiveness of small-scale dairy production systems in central Mexico.

The objective of this work was to determine the effect of family labour on the profitability and competitiveness of small-scale dairy farms in the highlands of Central Mexico. Economic data from 37 farms were analysed from a stratified statistical sampling with a Neyman assignment. Three strata were defined taking herd size as criterion. Stratum 1: herds from 3 to 9 cows plus replacements, Stratum 2: herds from 10 to 19 cows and Stratum 3: herds from 20 to 30 cows. The policy analysis matrix was used as the method to determine profitability and competitiveness. The coefficient of private profitability (CPP) when the economic cost of family labour is included in the cost structure was 8.0 %, 31.0 % and 46.0 %. When the economic cost of family labour is not included, CPP increase to 47.0 %, 57.0 % and 66.0 % for each strata, respectively. The private cost ratio (PCR) when family labour is included was 0.79, 0.51 and 0.42 for strata 1, 2 and 3, respectively. When family labour is not included, the PCR was 0.07, 0.25 and 0.26. Net profit per litre of milk including family labour was US$0.03 l(-1) for Stratum 1, US$0.09 for Stratum 2 and US$0.12 l(-1) for Stratum 3; but increased to $0.12, 0.14 and 0.15, respectively, when the economic cost of family labour is not included. It is concluded that family labour is a crucial factor in the profitability and competitiveness of small-scale dairy production.