Analysis of the cost of production and profit maximization in sheep farms from south-west bulgaria

The purpose of this study is to compare the cost of production with purchase prices to analyze the farmers' situation in terms of the opportunities they have to sell their produce at market prices and not to lose them. The maximization of profit is based on a model of a milking sheep farm, to which all sheep farms in the same region in the analyzed region should aim. The production of forage (especially grain) in this region is limited, which is why the expenses for forage are the greatest in production for both products – milk and lamb growth. The cost analysis indicated that it was lower in some of the farms, yet close to the sale price, while in the larger portion of the farms (in all three groups), it was higher. The developed model for profit maximisation in the production of sheep’s milk led us towards the following parameters: milk price of BGN 1.40 per litre and amount of produced milk between 42,000 and 45,000 litres, in which case the profit was maximal per both methods.