7. Profitability – costs relationship in the livestock sector

Author: Evgeni Genchev, Nadezhda Petrova


A number of firm factors have been identified to influence the profitability of livestock production. The aim of this research is to investigate the relationship of the types of costs to the profitability of a sample of livestock farms in Bulgaria. The source of data for the study is the annual financial statements of the covered farms. The sample consists of a total of 72 farms from the livestock sector. The research period covers a total of 14 years, 2008-2021. A panel regression model (random effects model) was applied to test the relationship between costs and profitability. Based on the research done and the sample of farms the following conclusions can be drawn: The costs of raw materials positively influence in both cases (statistically significant) the return on assets and (not statistically significant) the return on equity. On the other hand – personnel costs have a highly negative and statistically significant impact on the return of assets.

Key words: Profitability, farm costs, livestock sector, Bulgaria