Economic effects of investment in dairy farming

Abstract

Dairy farming is the most significant part of cattle raising. During the previous several years the volume of milk production has been maintained at a stable level, while there came to fall in number of dairy cows and number of farms engaged in dairy farming. Although the farms that own just a few heads of dairy cows usually step out the milk production, there are still a small number of farms specialized in dairy farming. The main paper objective is to present the economic effects of investment in the construction and equipping of dairy farm adequate for raising of 12 dairy cows. Economic analysis was based on the use of static and dynamic methods for investment assessment. Besides, there is also conducted the analysis of investment under the risk conditions (use of the break-even analysis). According to gained results (e.g. Internal rate of return, 11.98%, positive value of the Net present value, Payback period shorter than 5 years) the investment implementation is economically justified.