Economic analysis, dairy cattle, milk quality, profitability.
Objective: To analyze cow milk production cost in farm production units (UPPs), in a semi-specialized system, in the mountainous region of Veracruz, Mexico.
Design/Methodology/Approach: A questionnaire was applied to milk producers; additionally, the production units were visited.
Results: The main elements of the variable cost of milk production included: feeding, animal health, and fuel (86% of the total). The workforce accounted for 35 to 60% of the fixed costs. The production cost per liter fluctuated between USD$0.26 and USD$0.352 and the selling price ranged from USD$0.28 to USD$0.30; consequently, the profit margin is low. The profit per liter of milk fluctuated between USD$0.02 and USD$-0.04. The improvement in milk quality can increase profitability.
Study Limitations/Implications: The analysis focuses in the last year of operations and only takes into account six production units; therefore, the conclusions are only valid in that context.
Findings/Conclusions: Some UPPs have a positive profit; however, the combination of production factors must be reviewed. Additionally, in order to guarantee that more producers obtain a profit, some adjustments must be made.