Development of profitability, contribution margin and IOFC indicator of dairy farmers in the Czech Republic

SYRŮČEK, Jan, BARTOŇ, Luděk and BURDYCH, Jiří Development of profitability, contribution margin and IOFC indicator of dairy farmers in the Czech Republic. Náš chov, 2025, vol. 84(4), p. 16-20. ISSN 0027-8068.
Year2025
CathegoryPublication in specialized journals
Internal link25040.pdf
Abstract

The main indicators assessing the economic performance of a dairy farm are profitability, contribution margin and income over feed costs (IOFC). The common denominator of these indicators, which can be used by different user groups, is the desire to achieve the highest positive value. Between 2014 and 2023, average profitability of milk production in Czech dairy farms without subsidies was nearly zero. The average contribution margin amounted to 38 thousand CZK and daily IOFC was averaged 115 CZK per cow. The results of these indicators have varied significantly from year to year, depending mainly on milk price. Differences between farms were further influenced by breed and market milk production. The optimum level of profitability is most often quoted to be within the range of 5 to 10%, which implies that the level of the contribution margin should be between 55 and 60% of total costs. The optimum level of IOFC can be determined for each farm by means of limits set on the basis of milk income, number of feeding days and coefficients varying according to the breed.