3.1. Economic Performance
The economic results of the five farms considered and their relative values in terms of weighted average and standard deviation are reported in absolute value per liter of milk in
Table 1.
In addition, the data reported in
Table 2 highlight the different percentage weights of the various components of positive (revenues) and negative (costs) income.
In terms of weighted average, the operating income amounted to 0.03 Euro per liter of milk, although the data reveal a strong level of variability among the farms examined, as evidenced by the high SD value of 0.09 Euro.
The main revenue item for all companies is of course the sale of milk, estimated on average at 0.43 Euro/L, and equivalent to 95.5% of total revenue. A much lower contribution to revenues is provided by the sale of meat by-products, equivalent 0.02 Euro/L in average unit terms, and 4.6% in percentage terms. Total revenue was determined from the sum of the two positive income components, which on average amounted to the value of 0.45 Euro/L. While there are almost equivalent revenue values among the five dairy farms, if an exception is made for the fourth case, where the higher unit sales price is justified by organic farming, the costs present an extremely wide range of variation, between the extremes of 0.35 Euro/L and 0.57 Euro/L, equivalent to 0.42 Euro/L in terms of weighted average (SD = 0.086). In this sense, the highest incidence is found in relation to the direct variable cost of 0.30 Euro/L of milk in terms of weighted average, corresponding to 70.6% of the total cost.
In this regard, the cost item that contributes to the greatest extent to these results, in accordance with the contents of
Table 2, is the feeding of livestock, involving feed originating both within and outside the farm, which taken as a whole represents on average more 50% of the total cost. Within this, the costs associated with the purchase of feeds and concentrates are clearly predominant, with a value of 0.18 Euro/L in absolute terms, and 43% in relative terms. Expenditure on farm-produced fodder is more limited, averaging 0.06 Euros/L (13.8%). Less relevant, and, respectively, equivalent to 7.4% and 6.4% of the total cost, are the costs for fuel and energy and other variable direct costs.
In relation to the second category of costs, regarding the use of fixed direct factors, the main item of expenditure involves the use of hired labor, which in average terms contributes a unit cost of 0.07 Euro/L, equivalent to 16.6% of the total. Only 1.4% of the latter was attributable to fixed costs associated with the use of facilities and machinery.
Less significant, as they amount to 0.05 Euro/L in unit terms, are the costs involving indirect factors, essentially of an administrative and management nature, which stood on average at 11.3% of the total.
Considering the retail business, the data show poor economic performance in the production process in three out of five farms, as demonstrated by the operating income figures that are significantly negative in the Farm 3 and 4 and, to a lesser extent, in Farm 1. In all farms listed above, a state of imbalance is observed between costs and revenues, which are not capable of adequately remunerating the contribution of the different factors of production.
More specifically, in Farm 1, and much more significantly in Farm 3, the losses, amounting, respectively, to 0.01 Euro/L and 0.11 Euro/L, are due to the excessive impact of salaried labor costs, which are higher than the average: 0.02 Euro per liter in Farm 1 and 0.12 Euro in Farm 3.
Concerning Farm 4, the cost of externally purchased feed and concentrates contribute most to the negative level of operating income; these cost have an impact in terms of higher associated costs of 0.09 Euro/L, when compared with the weighted average value.
In this sense, management is more efficient in Farms 2 and 5, which achieve a profit, albeit to a limited extent. These findings are due to the higher selling price in the marketplace, thanks to organic branding, in the case of Farm 2. In Farm 5, the profit is linked to a higher level of competitiveness in terms of production costs.
In particular, the best economic performances achieved by the 5 dairy farms considered are linked to two key elements: larger scale production, which allows for the creation of positive economies of scale, and the higher degree of intensification of the production process, as evidenced by the higher values in terms of kg of concentrates per cow, which result in higher yields in liters of milk per cow.
3.2. Environmental Performance
Table 3 presents the results obtained for each dairy farm in terms of kg of CO
2 eq per liter of milk produced, disaggregated into the four macro-processes of the supply chain: feed, animal breeding, milking and manure management. The animal breeding phase includes three processes:
Enteric fermentation of animals;
Consumption for animal feeding; and
Consumption for the management of the barn.
The macro process of manure management includes consumption for storage operations and transport and eventual storage-related emissions.
The contribution of the enteric fermentation of cattle is the most serious, with values of between 45% and 57%, which confirms the assertions of scientific studies in the sector, as the methane emitted by animals effectively represents the main source of greenhouse gases from cattle farming.
This is followed by the impact of the production of feed, which includes the cultivation stage for self-produced feed and the production and transportation of purchased feed, which is responsible for 35%–46% of total emissions.
Consumption related to barn equipment and machinery for feeding the cattle does not make a particularly significant impact on total emissions (at most 8% of total emissions of the sector).
The manure management phase makes a maximum contribution of 6%, while milking and milk storage operations make a contribution to total emissions of between 3% and 10%, mainly attributable to consumption for the refrigeration of milk.
3.3. The Relationship between Environmental and Economic Sustainability
The economic sustainability indicator, represented by the operating income, and the indicator for the environment, consisting of the CF of milk, are strongly and negatively correlated (
r = −0.779).
Figure 2 displays this relationship for the five farms studied, represented by individual points in the graph.
The results confirm the existence of a negative relationship between the two variables considered: a decrease in the CF of milk is accompanied, in general terms, by an increase in operating income. More generally, an improvement in environmental performance is achieved alongside an increase in economic performance, as highlighted by the positive change in profitability levels, thus establishing a sustainable benefit. Limited to the farms considered by this study, the two goals, respectively, of environmental protection and an increase of farm income, do not therefore appear to be antithetical, but rather can be pursued simultaneously through strategies for the mitigation of the environmental impact that also allow, at the same time, for better management in economic terms.
As also underlined by Bates and Watts [
28], the relationship between the dependent variable (representing the CF of milk) and the independent variable (consisting of operating income) is non-linear; specifically it is characterized by an approximated trend with an exponential equation, linearized by logarithmic transformation, the parameters of which have been estimated by the application of a linear regression model. In
Table 4, the main parameters and testing aimed at, respectively, evaluating the adaptation and statistical significance of the model as a whole are summarized. In particular, the value assumed by the index (
R2 = 0.668) indicates a good fitting of the data, demonstrating that the model is able to explain 66.8% of the total variability. Furthermore, the statistical significance of that fraction of explained variance is confirmed by the test F (
F = 6.050,
p < 0.10). The parameter estimated (
Table 5) confirm the presence of a linear negative relationship between the dependent and independent variables, as had already emerged in the correlation analysis.