Relevance of economic assessments
Production and processing are characterised by constant cost pressure and intensifying competition. This environment provides business opportunities for companies pursuing a segmentation strategy whilst simultaneously operating successful cost management. A certain measure of innovative capacity is vital for successful segmentation. In order to avoid generating massively increased costs, this process needs instruments which make it possible to assess the economic viability of innovative methods. In traditional methods economic feasibility studies play an important role in assessing whether cost components bring added benefit or whether it is possible to cut costs without compromising quality.
In the production sphere the question is how to assess agricultural work for which there is no free market price.

Cost reductions with quality leadership
The uniqueness of Swiss cheese in the sense of a USP (unique selling proposition) is favoured by the small-scale structure of cheese dairies. These small businesses are facing major challenges from intensifying competition. The size of the business greatly limits possibilities for economies of scale. At the same time there is the risk of the products' special features (and hence the consumer's willingness to pay) being adversely affected by inappropriate economy measures.

Economic viability of innovative processing methods
The use of innovative technologies can be a powerful boost to segmentation but, particularly in small-scale enterprises, the demand for innovative technologies poses a challenge in business terms. Because of their structure, the extent of the resources available to these enterprises is limited, making extensive investment difficult to implement. In addition there is often no sound, objective basis for decisions on the conditions under which the use of a specific technology would be commercially profitable. At the same time lenders require business plans with economic feasibility calculations on which to base their decisions (for example within the new regional policy framework).

In cheese production from highly concentrated milk (by microfiltration) there are no economic feasibility calculations (including costs and revenue from products and by-products) for small-scale businesses. This slows the spread of innovative technologies, stifling the innovative power of small-scale cheese producers. The method touched on also has some very interesting commercial aspects, for example the possibility of product segmentation, but here again there has been no economic assessment.

Competitiveness and externalities of production systems
The free market price does not reflect all the effects emanating from a product. There is no free market price for public goods (for example clean air, unspoilt countryside), there are external costs (for instance air pollution) and benefits (unspoilt countryside). This can result in goods being overused, destroyed or not even produced (goods with positive externalities).
Even if use is made of the most economically suitable production system, there will be undesirable effects if free market prices do not provide sufficient incentive to do certain work of external benefit or to cease activities with external costs.