Economic analysis of the optimum dairy farm planing in Phetchabun province

In many dairy farming promotion areas, farmers have been facing up with problems of low production return and high cost due to inefficiently utilization of production factor. Therefore, this study is aimed at quantifying an optimum farm size by efficiently utilizing the existing limited resources and maximizing the net benefit over cash cost by using Linear Programming. The study is also extended to analyze the changes of the optimum farm size effected by the changes in costs and revenues using Sensitivity Analysis. These could be a guideline in decision making of optimal numbers for starting a dairy farm business in the promotion areas. The result of the optimum production plan analysis of farm size 1 (small farm size, milking by hand, starting at 1-10 dairy cows), farm size 2 (medium farm size, milking by hand, starting at 11-20 dairy cows), farm size 3 (medium farm size, milking by machine, starting at 11-20 dairy cows) and farm size 4 (large farm size, milking by machine, starting at 21-30 dairy cows) reveals the start rearing of 3, 11, 11 and 21 dairy cows per farm respectively. The Sensitivity Analysis showed that a decline in loan interest, cost of concentrate feed and the raise of raw milk price provide a higher benefits over cash cost. When, the raw milk price increase to 10 baht per kilogram, the number of start rearing cow at all farm size will increase, except the forth farm size. Therefore, the government subsidy such as a guaranteed raw milk price will be useful. Base on the survey data of year 1998, the result on production plan indicated the start rearing cows at 10, 19, 20 and 21 respectively, In term of farm management, the problems of fertilization and insufficient investment are found to be the significant problems. In summary, the optimum farm size for Petchabun is the small farm size, milking by hand at the starting of 3 dairy cows. Whereas, a large farm sizes, milking by machine, is not an optimum farm size to promote because it requires high investment and long term of payback period. In applying the study's result, the adjustment of some data to be more realistic and recommended.