International competitiveness of Austrian milk production - results from the IFCN Network

This study examines the international competitiveness of dairy farms in Austria. This is done using the International Farm Comparison Network (IFCN). In this network, typical agricultural businesses were analyzed with globally uniform methods. Four farms from Austria and 25 businesses from other countries are the basis for the present comparison. In particular, the following results are available: proceeds and production costs per 100 kg of fat-corrected milk (FCM), the remuneration achieved per hour of labor, and selected indicators which refer to the production systems of the farms. Austrian dairy farms had the highest production costs except for the Swiss; opportunity costs for labor had the highest share in production costs. High costs are due to locational disadvantages, the small size of the farms and in part high factor prices. Higher direct payments only partially compensate the gap in costs; this results in an inferior labor remuneration in comparison to other countries. On the other hand, typical farms in Austria can be labelled as little susceptible to risk because the production factors labor, land and capital are supplied and owned by the farm managers themselves. The analysis of the production systems shows that ecological criteria are taken more into account in Austria than in some other countries. The study concludes that in order to increase competitiveness, milk production in Austria will have to be practiced even more efficiently, at lower unit costs but not impairing product quality and high ecological standards.