The cost competitiveness of Alberta dairy farms

by Grant, Heather-Anne Ruth

The World Trade Organization (WTO) is currentIy formuiating an agenda for a new round of global trade negotiations; therefore, the likelihood of increased cornpetition within Canada's supply managed dairy industry is probable. Consequently, there is a greater need for producers to be concerned with their competitiveness in the international marketplace. This study assesses the cost competitiveness of Alberta dairy producers by estimating the economic costs associated with mi1k production, deriving the physicai and economic eficiency of producers, and imputing the economic profit of fms under international price scenarios. Results support the presence of economies of six and economies of yield within Alberta rnilk production. A link between increased herd size, labour productivity, and Iower total labour costs was identified. The results also indicate that by decreasing both feed costs and fmily labour expenses, producers can irnprove their economic profit at the international level.