Production structure of milk-producing farms in the Isfahan County

Relatively high cost of milk production appears the necessity and importance of producers and policy maker's attention in order to reduce the production cost. It would require full knowledge of the structure of production technology. The present study analyzed the production structure of milk-producing farms of Isfahan. To this end, the Translog cost function and derived cost share equations estimated in a system of equations by iterative seemingly unrelated regression using the theory of duality. The results showed that the milk production has increasing returns to scale. Magnitudes of own price elasticity of inputs also indicate that they are inelastic. However, the own price elasticity of animal feed is the smallest. Also, the cross elasticity of animal feed against the change of other input prices is lower than other ones. Finally, it is recommended that the milk-producing farms can increase milk production by increasing the amount of inputs proportionally. In other words, they can use advantages of increasing returns to scale in order to more economical production.