Profitability Analysis of Small-Scale Beekeeping Firms by Using Life Cycle Costing (LCC) Methodology

Abstract

Increasingly, beekeeping sector attracts attention due to its potentialities linked to several aspects: Environmental benefits, commercial value and of promotion of rural development. Indeed, among the small-scale agro-food chains, beekeeping plays a significant role, especially in rural context, where the diversification of farms activities can be provide a relevant integration of income. However, frequently, apicultural activities are characterized by several weaknesses ascribable to the fragmented production, difficulty of marketing actions and lack of training of operators. These problems are particularly present in Calabria region in South Italy where, anyway, thanks to several suitable climatic conditions, high quality standards of honey are obtained. So, in order to achieve the efficiency of firms and to improve the business beekeeping production it is necessary to arrange a production system that takes into account the real availability of material resources. The economic behavior of beekeepers and their investment choices are fundamental to accomplish a successful business that, more and more today, needs to high productivity of labor and adequate equipment, guaranteed by optimization of production factors. This paper has a two-fold purpose: Firstly, it aims to conduct an economic analysis of beekeeping activities, as significant small-scale agri-food chain in southern Italy, by analyzing the production, processing and packaging of honey in farm realities of Calabrian region. The second objective of this paper is to evaluate the profitability of investments realized in beekeeping firms. For this purpose, a joint use of Life Cycle Costing (LCC) methodology and economic indicators was applied in order to analyze in detail cash outflows linked to each phase of honey production system (planning, management and disposal) and to identify key elements that can improve the farm management. Results showed the economic viability of the investment and a suitable level of profitability. Furthermore, the analysis carried out confirms these methodologies as useful tools to support investment choices and to improve economic performances of management strategies of agro-food producers.