an assessment of the potential profitability of poultry farms a broiler farm feasibility case study

Description

Poultry farms, mainly chicken farms producing meat or eggs, can be highly specialized operations. To maximize profits and plan future enterprise activities, a feasibility analysis prior to investment and proper management during the operation are required. Proper management ensures efficient production and good quality products (meat or eggs). This is accomplished by controlling diseases, maintaining feed efficiency, proper handling of wastes, and proper sanitizing of the poultry house. Due to short turnover rates of poultry flocks and strong market demand, the poultry business could potentially be a profitable enterprise. This study details a profitability analysis on a flock of broilers raised for the purpose of meat production. A farm and its facilities were rented to grow and finish the flock for market delivery. The farm was located in South Lebanon, in the Marjoyoun Valley and was rented on a lump sum basis. Production (input) costs and sales (output) prices were used to determine the feasibility of growing broilers in the region. The flock was introduced into the poultry house on November 11th, 2009 and was managed until it reached the slaughtering phase, as per market requirements, on December 20th, 2009. The total production cost was $10,479 (including rental cost, labor salaries, electric cost, and other miscellaneous costs). Because the farm used in this study was rented, depreciation expenses on the buildings and equipment were not considered in the feasibility analysis. The flock produced 4,428 kg of meat at a market selling price of $3.10/kg of meat. Thus, total sales were $13,726.80 (USD), resulting in a net profit of $3,247.80 (USD). Depending on the location of the poultry farm and the owner’s experience and facilities, profitability may vary. Market prices of chicks, meat, and feed vary and these variations can affect enterprise profitability. Examining input and output price trends from 2007 through 2009 revealed the following insights. When the price per kg of meat goes down, feed costs tend to decrease (compensating for the low meat price). When the price per chick increases, the price per kg of meat also tends to increase, thus compensating for the increased cost per chick. Since price variations are critical factors in determining future profitability, statistical forecasting techniques were used to set a range of price expectations for the year 2010 so that sensitivity analysis could be performed. Sensitivity analysis was used to test the robustness of this feasibility study under several different pricing scenarios. This analysis showed that the operation is predicted to be profitable, or at least break even, at all the forecasted extremes of input and output prices including low meat prices coupled with high feed and chick costs.

Details

Level: under-graduate

Type: dissertations

Year: 2010

Institution: university of tennessee at martin

Contributed by: libraryadmin1@2022

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