Comparison of different costing methodologies for calculating production costs in dairy farming

Abstract

Cost management is a relevant and highly important topic for agriculture and, in particular, for dairy farming. Among the various methodologies for calculating production costs in agribusiness, the Total Cost, Operating Costs and Agro Costing methodologies stand out for being specific to agricultural and livestock production systems. Given this, the objective was to compare the main characteristics of the costing methodologies used in dairy farming. Data from 485 dairy farms located in the state of Minas Gerais were analyzed, whose production costs were determined using the Total Cost, Operating Costs and Agro Cost methodologies. It was found that the Total Cost methodology has an economic nature, as it considers opportunity costs. The Operating Costs methodology has an accounting nature, as it is more concerned with managerial aspects of production costs for the decision-making process. Finally, the Agro Costing methodology has a hybrid nature, with specific indicators for financial, accounting and economic analyses, therefore being an improvement on the others. Also noteworthy are the contributions of this research which, when comparing the break-even point with the parity point, presents justifiable procedures for their use, as well as mechanisms for evaluating the accuracy of the indicators. It is concluded that the Agro Costing methodology is the most complete among the three, as it presents indicators that can be calculated on properties with any type of specificity, a condition that does not occur with other methodologies. In addition to contributing to the scientific community, this research is important for rural producers who aim to implement efficient cost management systems, being able to identify which methodology can be best used in their realities.