AN ECONOMIC ANALYSIS OF BROILER PRODUCTION IN THREE STATES OF NIGERIA

AN ECONOMIC ANALYSIS OF BROILER PRODUCTION IN THREE STATES OF NIGERIA

Abstract:

Nigeria is a country in dire need of a quick animal protein source to meet up with the demand of its ever increasing population. Development of poultry industry has been identified as one of the quickest means of bridging this deficiency gap. The development of this industry has, however, been hindered by many problems and the broiler enterprise has been found to be the worst affected. The biggest problem associated with broiler enterprise is the high cost of inputs used in the production process. This results in low profit to the producer and the high cost price to the consumer resulting in very low demand for the product. As such, determinants of costs and returns together with efficiency measures of financial success for the broiler enterprise are analysed in this study. A total of 40 poultry farms were visited out of which 19 farms that produced broilers were considered for the study. The low size of 19 broiler farms indicate that majority of poultry farms are concentrating on layer production, and this also had an implication on the analytical framework used to achieve the objectives of the study. Descriptive, quantitative statistics, and net farm income analysis were used in the analyses and the following major conclusions were made: (a) the net farm income which is the central measure of overall financial success of a farm was found to be positive in most of the farms and increased with the scale of production; (b) the returns to factors of production (labour and management) are lower in small farms when compared to large farms. Return on capital for the various farms was not found to differ significantly but was seen to be related to efficiency of management. The average return on capital in the study area is about 45% which is higher than the current bank lending rate of 21%; (c) the gross ratio which measures the ultimate solvency of farms was found to be about 0.60 for the broiler farms and does not differ significantly between small and large farms at lower level of production; (d) the operating ratio which shows the proportion of gross income that goes to pay for the operating costs is about 0.72, i.e. 72 percent, which is quite high. There is also no significant difference between known classes of farms which is due to the fact that all producers obtained inputs from a common market; (e) the fixed ratio which measures the proportion of gross income that goes to service fixed resources is under 5 percent in all the farms. This indicates the rudimentary stage of poultry industry with little fixed costs components. Based on these results, it can be concluded that broiler production, despite the current decline, is still a profitable venture. What is needed is to devise ways and means of improving the efficiency of the production system to enable the producer realise more income and profit from his investment to offset the current high inflationary trend being experienced in the country.

AN ECONOMIC ANALYSIS OF BROILER PRODUCTION IN THREE STATES OF NIGERIA

Sharing is caring!