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Modeling of economic efficiency of pig farming in agricultural enterprises

Author

Listed:
  • Maksym, Volodymyr
  • Chemerys, Vasyl
  • Dushka, Vitalii
  • Dadak, Oksana
  • Martyniuk, Uliana

Abstract

Purpose. The purpose of the study is to determine the principal reserves for increasing the potential of economic efficiency of pig breeding in agricultural enterprises of Ukraine based on modeling the impact of a set of technological and cost variables on the profitability of sales and production. Methodology / approach. The study uses the method of economic-and-mathematical modeling in determining and justifying the level of potential growth of economic efficiency of pig breeding in agricultural enterprises of Ukraine based on different options for optimizing the values of input variables to obtain maximum profitability of sales and production based on 2020 input data. A monographic method is also used for complex research of basic problems of the pigs breeding development in Ukraine, and calculation-constructive method – when substantiating directions for increasing the economic efficiency of pig farming in agricultural enterprises. Results. According to the results of modeling the economic efficiency of pig farming in agricultural enterprises of Ukraine, it was found that based on the optimization of production costs and sales policy, the potential upper limit of profitability in 2020 was about 70 %, which is the most optimistic option. Enterprises organize their cultivation of basic types of feed and enter promising markets with a favorable market environment for business, which allows them to sell products at higher prices. However, in 2022, the upper limit of economic efficiency in terms of sales profitability is projected to decrease 2.4 times or up to 30 % due to rising prices for feed and energy. For a significant proportion of enterprises, pork production will be unprofitable. It also takes into account the effect of scale on the level of economic efficiency, according to which a change in the average concentration of pigs in agricultural enterprises of Ukraine by 1 % leads to an average change in the profitability of sales by 0.3 percentage points (p. p.) and gross profit – at 0.11 p. p. The level of influence on the performance indicators of the main variables, which are taken into account in the model, is determined. It is established that the highest weight of the impact on the profitability of pig sales is the sales price, marketability level (0.81 p. p.), feed conversion, and the average cost of 1 kg per unit feed (0.56 p. p.). The optimal business model of a pig breeding organization is proposed, which will increase the economic efficiency of pork production and bring its level closer to the defined and justified based on modeling potential. Originality / scientific novelty. Methodological approaches to evaluating the economic efficiency of pork production in agricultural enterprises based on modeling profitability indicators considering the established optimization criteria have been further developed. Practical value / implications. Based on the results of modeling the potential of economic efficiency of pig breeding in agricultural enterprises of Ukraine, the principal growth reserves are determined following the main established optimization criteria, which allow producers to choose the best option to increase profitability, taking into account technological and market conditions. The proposed method of determining the economic efficiency of pork production and assessing the principal reserves of its increase can be used for economic analysis at the level of individual enterprises that raise pigs and at the industry level in general.

Suggested Citation

  • Maksym, Volodymyr & Chemerys, Vasyl & Dushka, Vitalii & Dadak, Oksana & Martyniuk, Uliana, 2022. "Modeling of economic efficiency of pig farming in agricultural enterprises," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 8(3), September.
    • Handle: RePEc:ags:areint:330345
    DOI: 10.22004/ag.econ.330345
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    References listed on IDEAS

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    1. Chemerys, Vasyl & Dushka, Vitalii & Dorosh, Mariana & Maksym, Volodymyr, 2020. "Export potential of the livestock breeding industry of Ukraine," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 6(3), September.
    2. Jaroslav Havlíček & Ludmila Dömeová & Luboš Smutka & Helena Řezbová & Lucie Severová & Tomáš Šubrt & Karel Šrédl & Roman Svoboda, 2020. "Efficiency of Pig Production in the Czech Republic and in an International Context," Agriculture, MDPI, vol. 10(12), pages 1-18, December.
    3. Jeffrey J. Reimer, 2006. "Vertical Integration in the Pork Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 234-248.
    4. Jarkko K. Niemi & Heikki Lehtonen, 2011. "Modelling pig sector dynamic adjustment to livestock epidemics with stochastic-duration trade disruptions," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 38(4), pages 529-551, October.
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